Abstract
The aim of this study is to analyze the major cause of the instability of foreign direct investments in Albania these last years, their lowest level of FDI when compared with other countries in the region, and the importance of these investments in developing countries like Albania. The size of FDI has a significant effect on the financial and macroeconomic factors, government and infrastructure factors, and the factors by fiscal nature. In this study, we disengage fiscal factors and in particular, the corporate profit tax rate. The aim of this study was to prove that in countries with weak legal infrastructure, this factor is statistically significant in attracting Foreign Direct Investment. Thus, should Albania be considered as a country with weak legal infrastructure? Due to this question, we took into consideration specific indicators measured in recent years by various world organizations by comparing them with various countries of the region. Also, we built an econometric model through multiple regression by collecting data on the tax rate applied in Albania from 1992- 2016, and the level of FDI for this period. This is in a bid to ascertain the effect or impact that profit taxes has on FDI inflows in Albania. In conclusion, Corporate Tax Rates is a factor that has a very significant impact on the size of FDI in Albania.
Highlights
The importance of foreign direct investment is always increasing, especially after the deelopment of globalization that has occurred recently in the world
Foreign direct investments are an important indicator of the confidence of foreign investors in the country
There is a lack of inflows of new investors in the country, unlike neighboring states, especially Macedonia and Serbia
Summary
The importance of foreign direct investment is always increasing, especially after the deelopment of globalization that has occurred recently in the world. In the last two or three decades, a lot of authentic empirical studies of various researchers have been made These researchers have proven major benefits as a host country of FDI, but the disadvantages or losses that host countries have, especially in small countries where foreign investors are favored by the respective governments for privatization or concession granting of some state companies versus a lower value than the market, is to have the benefit of the political campaign. Another reason is that economy experts believe that foreign direct investment negatively affect the balance of payments. FDI in Albania will continue to be an important source of capital flows and economic development
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