What is the Perception of Foreign Investors about Economic Factors? A Study of Foreign Companies in Kosovo

Abstract

Over the past decade, geopolitical preferences increasingly drive the geographic footprint of FDI (IMF, 2023). While the approach of investors to these preferences is still unclear. The purpose of the study is to provide the perception of foreign investors for economic factors in Kosovo (The Motive of Foreign Investors, MFI) as a dependent variable measured through independent variables, Exchange Rates (ER), Inflation (INF), Interest Rates (IR), Access to Credit (AC), Competition (CO), E-Banking and Banking Services (E-BBS), Economic Growth (EGr), and Taxes (Tax) as independent variables. Quantitative primary data collected non-randomly with a structured questionnaire, are 52 respondents of the largest Foreign Investors operating in Kosovo from January 2021 - August 2023, source, Kosovo Statistics Agency, 2023 and Kosovo Tax Administrations, 2023. The data were processed with the statistical technique SPSS, 25. Through the Multiple Regression method, the Ordinary Least Squares (OLS) Pearson Correlation model, we extract the results, the tests, Principal Component Analysis (PCA) are used in advance; Cronbach's Alpha; Cohen's kappa (κ); One samples Kolmogorov Smirnov and Collinearity, evaluate the reliability of the data. The results of the study find that the increase in the motivation of foreign investors in the scale, intercept β0 286.6 percentage points is attributed to the factors included in the model: INF has a statistically significant and positive effect of 47.7 units (β2 = 0.477, Sig. < 0.010); IR has a negative and statistically significant effect (β3 = -.842, Sig. 0.002), E-BBS has a statistically significant negative effect (β6 = -.402, Sig. < 0.001); AC has a statistically significant negative effect (β4 -.388, Sig. < 0.05); EG, has a statistically significant positive effect (β8 = 118.1 percentage points, Sig. 0.000); Taxes (TAX) have a statistically significant positive effect (β8 = 0.169, Sig. < 0.011). Otherwise, ER has a statistically insignificant positive effect (β1 = 0.077, Sig. 0.586), while CO has a statistically insignificant positive effect (β5 = 0.008, Sig. > 0.953) in increasing the motivation of foreign investors. The results of this study recommend that economic politicians in Kosovo implement better IR, E-BBS, AC and CO policies that promote FDI and increase the flow of FDI into the country.