This paper analyzes foreign direct investment as a factor in the growth and development of the receiving country. The aim of the paper is to explain the theoretical aspects of foreign direct investment, which will serve as a basis for presenting the positive and negative effects of foreign direct investment on the receiving country. Furthermore, the trends of foreign direct investments of the Republic of Croatia and the Republic of Serbia, which have similar historical, social and locational characteristics, will be compared. During the preparation of the work, collected secondary sources of data, scientific articles, publications, professional books of foreign and domestic authors and Internet sources relevant to the studied topic were analyzed. In the first part of the paper, foreign direct investments are analyzed as a factor in strengthening competitiveness and sustainable development. Then, the aspects of foreign direct investments and their effects on the receiving country are theoretically treated. The final part presents an analysis of the structure and trends of foreign direct investment in Croatia and Serbia using relevant data for the period from 2010 to 2020 and a comparison of SWOT analyzes of the Republic of Croatia and the Republic of Serbia as investment destinations. The results of the analysis of foreign direct investments in the period between 2010 and 2020 showed that Serbia achieved better results in attracting such investments compared to Croatia. Analysis of earlier research by various authors on the impact of foreign direct investment on the growth and development of Croatia and Serbia indicated variable results and a lack of unequivocal conclusions.