Economy & Business, Volume 10, 2016

Abstract: As economic growth is one of the crucial factors for the development of a country, foreign direct investment is one of the tools for achieving it, especially in small open economies such as Bulgaria. However, there are some additional issues to be taken into account, as the privatization inflows which are a result of transition from central-planned economy before 1990 to a market one. State-owned assets have diminished since then and the question is: are there any substitutes for these inflows today? The purpose of the paper is to review foreign direct inflows and outflows and to analyze their impact on economic growth and on enhancing economic development. The first part of the paper is focused on foreign direct investment in Bulgaria for the last 25 years, while the second one is on the effect of investments on economic growth.