Foreign Direct Investment in Slovenia - Attracting FDI and Optimizing the Effects

Abstract: Foreign direct investment (FDI) is widely considered to be one of the main generators of so called spillover effects, where not only direct employment is a positive outcome but the whole economy can benefit in various ways. The recognition of spillovers has resulted in a more active role of host country governments to attract FDI. This thesis analyzes the FDI inflows in Slovenia and the role of public policies to enhance the positive spillover effects, in order to determine how the presence of FDI has affected the local economy. The increased openness towards foreign investors and the policies used to promote FDI are depicted. It is a qualitative case study, illustrating how the presence of the French automaker Renault in Slovenia and the government’s involvement in the recent production expansion has affected the local economy. The results show evidence of positive spillover effects through backward linkages to suppliers, training of workers, and creation of indirect jobs.