Investment Activity in Small Open Economies

Abstract

The paper gives a brief elaboration of the basic macroeconomic aspects of investments with emphasis on the specificities of small open economies in the process, theoretically elaborates the need for openness of small economies (especially the economies that need the acceleration of their development), then highlights the risks and opportunities arising from the investment activity both on the micro and macro level. Further distinguishes between investments in financial instruments and in real investment projects, emphasize the need for creation of an optimal diversified portfolio. Finally, the paper underlines the need for various forms of foreign direct investment for all economies, particularly the opportunities and threats arising in small open economies, to complete the wholeness with empirical data of the previously elaborated matters on the example of the Republic of Macedonia as a small open economy.