An Analysis on the Contribution of Foreign Investment in Economy

The contribution of capital formation in new economic growth models, due
to its importance, has been continually expanded.
In this paper, based on theoretical analysis and empirical studies, the effects of foreign investment on economic growth with an emphasis on foreign direct investment and foreign portfolio investment are investigated.
The results confirm the strengthening of the role of investment and indicate that among different foreign investment flows, FDI plays the most effective role in economic growth. In addition, due to its creative motivations, FDI shows a clearer and stable prospective in development plans aimed growth. In this direction, according to the results of the study, the flexibility of production structures, capacity of investment absorption in host countries and the intensity of the countries requirement to the foreign financial resources are the most important determinants of FDI effectiveness on the countries' economic growth