FOREIGN INVESTMENTS POLICY WITH SPECIAL ATTENTION TO BOSNIA AND HERZEGOVINA

Abstract

International economic relations depend on political relations between the states. They are mutually conditioned and related. Every country, aiming at development of its industry, will strive to maintain good or at least tolerant political relations. This will be very important for foreign investments in the industry of the country only if it previously establishes internal political conditions and the rule of law in accordance with approved principles of international trade law. Political and economic elements form basic conditions together with market economy, foreign capital investment and free use of profit from invested capital. Foreign investing is not a donation, but an economic interest intended to make a profit which has to be higher than invested money by recruiting the citizens of the country where the capital is invested. This reflects mutual interests of the non-residents and the state. Recruitment creates better social conditions of living and, therefore, every country is interested in creating favourable conditions for foreign investments. In this way, foreign investments provide good conditions for participation of industrial subjects which belong to different types of sovereignty on the world market and form the prices of products and industrial services in the world. This is the role of World Bank as well as European Investment Bank.

Bosnia and Herzegovina has legal assumptions for foreign investments, but lacks political assumptions as a base for development of economic relations with abroad. Due to this fact, foreign investors are not interested to invest their money in industry of this country. Investments of international community are mainly concerned with elimination of consequences of war damage, which proved to be insufficient to raise the unemployment rate. This causes a great number of poor families in Bosnia and Herzegovina.