FACTORS AND TOOLS OF GROWTH IN FOREIGN DIRECT INVESTMENT FLOWS BETWEEN EU MEMBER ECONOMIES

Abstract

The turbulence of the modern global economic space necessitates a deliberate approach to identifying key factors and tools that stimulate the flow of foreign direct investments among all global economic participants, including EU member states. This study aims to identify the factors and tools that drive the growth of foreign direct investment flows between the economies of European Union member states. The article identifies the factors and tools driving the growth of foreign direct investment flows between the economies of EU member states. It highlights key macroeconomic factors influencing investment flow and interaction within the integration union and with the external environment. Additionally, it examines the aspects of investment attractiveness, as a substrate of "the investment potential and investment risks of the territory." The formation of the EU investment policy, as a component of the general commercial policy, is based on a three-pronged approach: global, integrated, and comprehensive. It is emphasized that the EU has now established a new industrial ideology centered on the ability of European industry to implement the principle of circularity across all sectors, drive innovative changes, address environmental issues, and enhance competitiveness. Today, the primary component of the EU's investment policy is the five-year investment and economic plan (2021-2026) under the Eastern Partnership program for recovery, stability, and reforms. Through conducted research, a retrospective analysis of the evolution of the European Union's investment policy has highlighted overarching patterns in the interaction of the identified factors. Firstly, the significance of "hard" factors diminished as they were balanced by "soft" factors, addressing corresponding weaknesses related to the territory. However, negative "soft" factors cannot be completely offset by "hard" factors alone. Secondly, among the "hard" factors, the availability of natural resources stands out as a critical competitive advantage for the territory. Thirdly, while the proximity of countries remains a crucial prerequisite for regional economic integration within the EU, factors such as the "neighborhood effect" and "cultural and historical proximity" play increasingly flexible roles. Geographical location, once paramount, has now dimished in significance.