Domestic and International Factors Affecting the Inflow of Foreign Direct Investments: the Case of Singapore

Over the past few decades, foreign direct investment has increased in volume. Usually FDI are concentrated in the developed world, but there are also several of exceptions, countries that have been able to achieve a high level of foreign direct investment, improve the domestic economy and become independent actor of the international economic relations, for instance Singapore. Investments are one of the levers of movement of all economic processes in the world. Foreign direct investments can help even developing and “small” countries become significant players in the world arena and increase the economic competitiveness. This paper raises the question: how “small” states can achieve the same economic development as the world's leading economies, on the example of Singapore? During the research there was described the specificity of investments and investment climate. Moreover, there was an analysis of the stages of the development of Singapore's economic policy and current investment trends. Furthermore, with the graphical analysis method and comparison of the political steps taken by Singapore it was proved that even a developing state could become financial center and be transformed into one of the top countries in attracting FDI. Furthermore, the main conclusion of the work is that Singapore has managed to effectively implement a strategy to attract investment through an effective combination of internal and external factors and policies, including the creation of a better investment climate, business environment and laws, a higher standard of living, and strengthening national security.