THE NECESSITY AND THEORETICAL FOUNDATIONS OF ATTRACTING FOREIGN INVESTMENT TO SMALL BUSINESSES
DOI:
https://doi.org/10.55640/Keywords:
Foreign investment; foreign direct investment (fdi); small business; economic development; investment climate; entrepreneurship; innovation; competitiveness; sustainable growth; global value chains; financial resources; investment attractiveness.Abstract
Small businesses play a crucial role in ensuring economic growth, increasing employment, fostering innovation, and enhancing the competitiveness of national economies. In the context of globalization and increasing international economic integration, attracting foreign investment has become one of the key factors supporting the sustainable development of small business entities. This study examines the necessity of attracting foreign investment to small businesses and analyzes its theoretical foundations. The research explores the economic significance of foreign direct investment (FDI), its impact on productivity, technological advancement, managerial efficiency, and market expansion within the small business sector. Furthermore, the article reviews the main theoretical approaches explaining investment flows, including modernization theory, endogenous growth theory, and investment climate concepts. The findings indicate that foreign investment contributes to the financial stability of small enterprises, facilitates knowledge transfer, and strengthens their integration into global value chains. The study concludes that creating a favorable investment environment and implementing effective institutional mechanisms are essential prerequisites for increasing foreign investment inflows into small businesses and ensuring their long-term competitiveness.
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