Innovation Oriented FDI as a Way of Improving the National Competitiveness

The main purpose of the paper is to accent the importance of the quality of FDI as a way of stimulation and encouragement the innovation activities in the host country. One of the benefits that come from the inward FDI is the possibility of transferring new technologies, but the most favorable benefits come from the possibility of using the inward location for development of new technologies. The FDI could have positive contribution to the qualitative improvement in the production structure of inward economy and to the competitiveness if they establish or settle their R&D activities in the host economy. Using the regression analysis the paper is trying to verify the interdependence between the FDI and expenditures for R&D of business sector as a way to influence or not to influence the innovation capacities in some target Western Balkans (WB) economies and Central European and Baltic (CEB) economies.