Economists have developed different FDI theories to explain why investors decide to invest in other countries and what impact these investments have on national economies. FDI provide countries not only with capital but also with innovations and technological advances, higher labour productivity and qualification levels, new jobs and have other positive effects. This, in turn, stimulates the growth of employment rates, consumption and GDP. Research focuses on the investigation of the impact of the FDI on the Latvia’s economic growth. On the basis of linear regression results, such factors like employment rate and total funding for research have the greatest impact on economic growth , but incoming FDI is also a statistically significant factor for economic growth. The multifactorial regression model for GDP growth rate forecast was developed. It used three factors that were statistically significant for economic growth – accrual rate, total factor productivity and incoming FDI. It is possible to use this model to demonstrate that favourable investment environment will foster economic growth in Latvia.