The paper examines the effects of inflation, unemployment, economic openness, and economic growth on the inflow of foreign direct investment in the countries of the Western Balkans and the European Union. The analysis is based on data obtained from the World Bank and UNCTAD databases for the period 2020–2024. In addition to descriptive statistics, OLS regression analysis, fixed and random effects models, and the Pearson correlation test are applied. A detailed analysis leads to results showing that economic growth has a very weak positive impact on the inflow of foreign direct investment, but the effect is not statistically significant. OLS regression indicates that only unemployment has a statistically significant impact among the analyzed factors, while in the fixed effects model inflation has a significant impact on foreign direct investment; the difference in results can be explained by different model specifications. The analysis compares the countries of the Western Balkans and the European Union in order to demonstrate how fluctuations and economic challenges affect the development of the observed economies, which are at different levels of development. Different development levels, institutional frameworks, and descriptive statistics have led to the conclusion that the effects of foreign direct investment and economic growth are greater in the European Union.

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