Investigation on Factors Affecting FDI Flow to Armenia

This research was undertaken with a primary objective to investigate on the factors which are influencing FDI flow to Armenia. Despite of quite liberal FDI policy and the fact that inflows and stocks of foreign total investment to Armenia grew by 43 percent in 2009, Armenia still is not a favorable place for real foreign investors, compared with neighboring countries. Most of the FDI to Armenia are still made by Diaspora investors based on patriotic reasons. For the first phase of the research, secondary information is obtained through examining relevant literature, concerning Armenia. In the second phase, the Dunning eclectic paradigm or the so called OLI paradigm model is applied to determine what factors affect FDI flow to Armenia. For this reason primary research through questionnaires has been conducted with fully or partially foreign companies operating in Armenia. In total 35 questionnaires were collected through e-mails and personal meetings. The results of the research indicate that taxation factors are the most important factors, followed by market and infrastructure factors affecting FDI flow to Armenia.