Foreign Investors' Motives for Investing in Economies in Transition: The Case of Serbia

Darko Marjanović; Branislav Dudic; Elena Jovičić; Jelena Vujadinović; Nikola Martinović; Đorđe Ćelić

doi:10.31181/ijes1612027287

Authors

Darko Marjanović Institute of Economic Sciences, Belgrade, Serbia Author https://orcid.org/0000-0001-7336-1964
Branislav Dudic 1) Comenius University Bratislava, Faculty of Management, Bratislava, Slovakia; 2) University Business Academy, Faculty of Economics and Engineering Management, Novi Sad, Serbia Author https://orcid.org/0000-0002-4647-6026
Elena Jovičić Institute of Economic Sciences, Belgrade, Serbia Author https://orcid.org/0000-0002-8356-9678
Jelena Vujadinović Institute of Economic Sciences, Belgrade, Serbia Author https://orcid.org/0009-0009-1375-370X
Nikola Martinović University of Montenegro, Faculty of Economics, Podgorica, Montenegro Author https://orcid.org/0000-0002-7484-2417
Đorđe Ćelić University of Novi Sad, Faculty of Technical Sciences, Serbia Author https://orcid.org/0000-0003-2200-1357

DOI:

https://doi.org/10.31181/ijes1612027287

Keywords:

Foreign direct investment, Internationalization, Foreign investors, Serbia

Abstract

Transition economies are attractive destinations for foreign direct investment (FDI), offering lower production costs, emerging consumer markets, and opportunities for strategic positioning, while also facing structural and institutional constraints. This study examines the motives of foreign investors in Serbia, with a particular focus on how investment motivations vary according to firms’ level of internationalization. The analysis is based on a survey of 300 foreign investors that entered the Serbian market between 2001 and 2019 (response rate: 29.3%). The findings indicate that the most important motives include entering a new market, observing consumers, customers, and suppliers, first-mover advantage, the availability of financial resources in the Serbian market, economies of scale, characteristics of the Serbian tax system, and natural resources and their prices in Serbia. However, a more detailed analysis reveals significant differences across investor types. Regional firms are primarily driven by market expansion, economies of scale, and resource-related factors, while global firms place greater emphasis on infrastructure, technological and informational inputs, and integration into broader production networks. Multinational firms display a more balanced pattern of motives, without a clearly dominant driver. These results highlight the importance of investor heterogeneity in shaping FDI patterns in transition economies. They also suggest that policy approaches tailored to specific investor profiles may be more effective than uniform strategies in attracting and sustaining foreign investment.

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