Importance of foreign direct investment in financing for innovative development of the Republic of Belarus

Abstract

The 21st-century trend is the acceleration of scientific and technical progress in conditions of the amplifying competition between producers for free market niches and between countries for leadership. The ideal development model of the modern state is the economy based on knowledge and innovations. At the same time the human potential and other factors of competitive advantages, new technologies are actively involved in this economy. So, conditions for economic growth and life quality improvement are created. Innovative development demands an adequate financial base. Insufficient financing will cause difficulties in the realization of ideas which connected with the introduction of innovative technologies, the release of hi-tech production, the realization of scientific and technical state capacity. Finally, it may lead to technological lag against the increasing level of knowledge intensity in the word. Therefore, the problem of search for adequate innovative development financing becomes important both from the point of view of theoretical judgment and in practice. The purpose of the article is the identification of the place, role and value of the direct foreign investment of innovative development financing of the Republic of Belarus. The carriedout analysis has shown that foreign direct investments inflows differ in considerable fluctuations from year to year. Debt tools prevail in foreign direct investments inflows structure and the investment climate of the Republic of Belarus needs improvement. Dynamic of foreign direct investment inflows are presented in branch and regional section. It is offered to concentrate efforts on foreign direct investments attraction to the hi-tech sector development which is based on V and VI technological modes. It will allow not only to improve investment potential of Belarus but to carry out structural economic transformation on the innovative way. Authors connect further research prospects with studying how to activate scientific and technical international cooperation of the Republic of Belarus with foreign countries. The main interest is cooperation with leading countries in technological development to find out the opportunities of successful experience application in the organization of innovative development financing of the Republic of Belarus, including foreign direct investment inflows.

Development of an Innovative Environment for a Knowledge-Driven Economy in Belarus

“…As noted earlier (Hrechyshkina & Samakhavets, 2018), human potential of Belarus seems sufficient for the development of intellectual services. However, it is important to use it for the development of the IT sector, innovative clusters, as well as to expand SMEs' potential.…”

Foreign Trade of the Republic of Belarus in the International Business Environment

“…Table 1 shows that the balance of trade in services was positive and had a tendency to increase. Note that FDI flows were con- Source: own study based on the National Statistical Committee of the Republic of Belarus (2019a;2019b) centrated mainly in the service infrastructure sector (Hrechyshkina, Samakhavets, 2018). In our opinion, from this point of view, it is necessary to use the export strengths of the Republic of Belarus more effectively, such as its favourable geographical position, the existence of a state export support system, and expansion of the accessible sales market within the EAEU.…”

Main characteristics of the foreign investment development of Belarus

“…At the same time, attracting investment is important for ensuring the innovative development of the Republic of Belarus (Hrechyshkina, Samakhavets, 2018). Belarus ranked only 86th out of 126 countries according to the Global Innovation Index 2018 (Cornell University, INSEAD, WIPO, 2018).…”