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Investment incentives are a widely used tool of economic policy employed not only in the Czech Republic (CR) but also in other European economies. Given the ambiguous perception established by the review of the literature on investment incentives and the effects that supported investment brings to the economy, this article aims to evaluate the issue of investment incentives in the CR with the use of a time series regression analysis (1998–2019) in order to answer two main research questions: Do investment incentives attract investment into economically weaker regions? Do investments supported by incentives lead to the economic prosperity of these regions? The inspiration for the article comes from a comprehensive study focused on investment incentives in the CR (Schwarz et al., 2007). The experts’ views on investment incentives are ambiguous – some perceive them positively, others criticize them and consider them undesirable.

The foreign direct investment (FDI) inflows have exhibited substantial increases with contri bution of relaxation of the impediments over the international flows of goods, services and capital mainly resulting from the accelerating liberalization and globalization as of 1980s. Consequently, international FDI inflows reached USD 3.111 trillion in 2007, but then contracted due to economic crises and the increasing protectionism concerns in the recent years and became USD 1.95 trillion in 2017 (World Bank, 2019a). The rapidly expanding FDI flows made the economic effects of FDI one of the muchdiscussed and studied topics in the international economics. On the one hand, the scholars have focused on the effect of FDI inflows on the economic growth, unemployment, total taxes, technological development, environmental degradation (see, e.g., Lasbrey et al., 2018).

As a consequence of political changes, the process of transitioning a centrally controlled economy to a market economy has influenced the development processes of the states in which this transformation has occurred (Hlaváček & Bal-Domanska, 2016). It was expected that the entry of foreign investors would bring an inflow of capital, new investment, export potential, and technological transfer (Estrin et al., 2009; Rapacki & Prochniak, 2009). Foreign direct investment (FDI) is generally considered to be the contribution of holders of know-how, technology, new management methods and skills, initiators of innovation activities, strategic employers, and exporters. FDI can lead to economic growth, changes in the business or institutional environment, restructuring of the economy and, ideally, also to the increase of labour productivity in the host region and the improvement of macroeconomic indicators (Damborský, 2013). Moreover, for transition economies, FDI is the key indicator for evaluating their economic transformation (Starzyczná, 2010). FDI in the Czech Republic, and in transition economies in general, is regarded as a crucial criterion for a successful economic transformation (Hlaváček & Bal-Domanska, 2016).

Sovereign Wealth Funds (SWFs) are still considered to be new-born institutional investors, in international financial markets, as well as innovative investment vehicles, despite their relatively long history. Several funds have been operating at a global level for more than fifty years, however the number of those created after the year 2000 represents the majority of the total in existence. For many years, these state-run funds have been almost anonymous investors, existing in the shadows, maintaining a low profile in the public eye. SWFs have been regarded as investment vehicles established in order to manage, in a rational and profitoriented way, pools of national wealth for future generations.

Benefits of globalization in the economy of the country is a contentious issue not only in general public but also among academics and professionals of the world economy and international trade, management and marketing, who hold important positions in European or international financial institutions.

Přímé zahraniční investice (PZI) jsou jedním z významných faktorů, které ovlivnil ekonomický vývoj tranzitivních ekonomik po roce 1989. Česká republika patři ve střední Evropě ke státům s největším objemem PZI na obyvatele, a to zejména díky své geografické poloze, tradici průmyslové výroby a příznivému poměru ceny a kvalifikace pracovní síly.

Stock market integration, stock market comovement and return spillovers between developed and developing stock markets,particularly CEE markets, are of great importance for international investors making financial decisions. Increased comovement of stock markets returns may diminish the advantage of internationally diversified investment portfolios.

Foreign direct investment has accelerated considerably as a result of the process of globalisation and liberalisation. This has seen a change in the operation of developed economies and, at a far broader level, has influenced undercapitalised transition economies after the fall of the communist regimes of Central and Eastern Europe. FDI fundamentally influences the national element of transition economies nd the regions it flows into.