Role of investment promotion agencies in attracting foreign direct investment: case study of lithuania

This study aims to investigate the influence of “Invest Lithuania“, an investment promotion agency attracting the foreign direct investments. In a reference to the accomplished Greenfield investment projects and created workspaces, the effectiveness of „Invest Lithuania” keeps increasing. Therefore, the aim of this study is to answer the question whether and to what extent “Invest Lithuania” contributes and makes influence to investors’ decisions. The main goal is to find out through which channels “Invest Lithuania” is able to influence investors’ decisions and where the impact of “Invest Lithuania” can be noticed. In order to find an answer to the main question of the thesis, three tasks must be completed: 1) To analyze regional FDI trends in Lithuania, Latvia and Estonia. The aim of this analysis is to find out if regional trends can explain Lithuania’s success in attracting FDI. 2) To analyze factors which can affect FDI in Lithuania. This includes political stability, legal and regulatory transparence and labor pool. 3) To find out and define the most influential factors affecting the results of “Invest Lithuania”. 4) To determine the most important role played by “Invest Lithuania” in attracting FDI –information provision or policy advocacy. The research revealed that in terms of regional trends since 2010, Lithuania has surpassed Latvia and Estonia in terms of new jobs created by FDI. The other factors affecting FDI in Lithuania has remained the same, that’s why it should not have affected the change in “Invest Lithuania” results. 8 factors - legal status of investment promotion agency, relationship with the government, budget, overseas and sub-national representation, relationship with the private sector, investor targeting and private sector mindset were tested in order to answer the main thesis question. In addition, an external research was made assessing “Invest Lithuania“ performance. Almost every variable was active in “Invest Lithuania’s” case except for the overseas and sub-national representation. Despite overseas and sub-national representation factors, “Invest Lithuania” case has matched all the examined criteria. It was also found that all the factors were of wider scope in the period of 2010 - 2015. Additionally, the research has revealed the role of information provider as the most influential one