Foreign Direct Investment In Albania Research Articles

The effect of foreign direct investment inflows on non-performing loans

Foreign direct investments (FDIs) are an important part of a country’s economic development and banks play a crucial role in terms of facilitating the FDI inflows. However, given that these inflows enable banks to increase the portion of loans, this increases the exposure to credit risk leading to potential increased non-performing loans (NPLs) (Ozili et al., 2021). This study aims to investigate this relationship in the Albanian economy during the period 2008–2022. Considering the rapid growth of FDIs in Albania in recent years and the importance that the banking sector plays, the purpose of this paper is to assess the impact of FDI inflows on NPLs in Albania while controlling for other relevant NPL determinants. Using an ordinary least squares (OLS) regression model, we find a significant and positive relationship between FDIs and NPLs in Albania. The findings reveal that higher FDI inflows, which are channeled through the banking sector in the economy, provide increased credit growth and therefore a potential deterioration in credit standards leading to higher NPLs in the economy. In addition, we find a significant relationship between financial intermediation indicators and NPLs implying that financial intermediation also plays an important role in controlling the level of NPLs in the Albanian economy.

The Impact of the Tax Rate and Average Wage Level on FDI: The Case of Albania

The purpose of this work is to study the factors that have an impact on foreign direct investments in Albania. The data taken into consideration belong to the period 2005-2019. The data are quantitative and secondary. Their source is the World Bank, the Ministry of Finance and Economy and INSTAT. Albania is a developing country and for this reason foreign direct investments are of great importance for its economy. The increase in investments creates new jobs, the increase in individual income, the increase in consumption and thus the economic growth of a country. The data were tested with the SPSS statistical program. The EURO/ALL exchange rate, merchandise trade, the annual increase in the country's average wage and the total rate of taxes and contributions paid by a company were taken as independent variables. The total tax rate and the exchange rate negatively affect the growth of foreign direct investments. This impact is significant. Merchandise trade has a positive effect on the growth of investments and also this impact is significant. The average wage level of the country has a negative effect on foreign direct investments, but this effect is not significant.

An Overview of Foreign Direct Investment in Albania

The aim of this study is to provide a clear picture of the value and country of origin for foreign direct investment to understand more clearly the current situation and the trend of foreign direct investment in Albania. The data published by the Bank of Albania show that FDI has a significant upward trend in Albania and an extension to more and more sectors of the economy. For empirical analysis, we used regression with primary data obtained from the World Bank for a period of 27 years analyzed with the statistical program SPSS 20. Based on the results of empirical analysis we came to the conclusion that foreign direct investment has had a positive effect on growth in Albania. In addition to the direct positive effect observed on economic growth, it is worth mentioning that foreign direct investment is very important for the country as it plays an important role in infrastructure, employment and consumption.

Low Labor Cost as a Determinant of Foreign Direct Investments in Albania, Kosovo and North Macedonia

Expanding activities abroad to exploit existing advantages, to seek economies of scale or to finalize a production phase in an economy other than that of the home country is common for multinational enterprises (MNE), whilst seeking new locations where higher intensity of labor is required is a characteristic especially for the vertical foreign direct investment (FDI) and export-oriented firms. Low labor cost is considered one of the primary comparative advantages for the countries of South-Eastern Europe in terms of attracting FDI. Our paper contributes to the literature by examining how low labor cost impacts the level of FDI inflows in three countries of Western Balkans: Kosovo, Albania and North Macedonia. Our analysis reveals that low labor cost is not positively related and significant in these countries with regard to the attraction of FDI inflows

Discussion: Challenges and Recent Developments of Foreign Direct Investments in Albania and Western Balkan Countries

Foreign direct investment (FDI) plays a crucial role in the growth and development of transitional economies and especially in countries where domestic capital is insufficient to meet the investment needs of the economy. Albania is a country applying for E.U. integration, so the country's central policies in recent years have brought about a liberalized economic framework and improved conditions for business development, attracting highly sought after FDI. This paper will provide an analysis of FDI in Albania and make a comparative analysis with the Western Balkan (W.B.) countries. The focus of the paper will also be on analyzing some of the critical elements that make these countries attractive to FDI, such as: analyzing the sectoral distribution of FDI stocks, the impact that inflows have had on the development of domestic economies, in creating jobs. FDI flows even though they have been in an upward trend, have not yet reached the desired expectations levels. W.B. countries have some very potential sectors to increase in the future and to be more attractive for FDI, such as tourism, service, transport, agriculture, industry. FDI had a positive impact on Albania's economy and in other Balkan countries. However, the region still needs to make many improvements in implementing institutional reforms, building and operating democratic institutions, improving the infrastructure. All countries need to collaborate to enhance political instability, resolve conflicts, and to focus on improvements and policies to attract potential investors.Implications for a Central European audience: This paper aims to contribute to increasing the knowledge about the opportunities and potential sectors to invest in the W.B. area. The article may make a positive contribution to the Central European businesses generally and especially to firms that are interested in investing their capital in W.B countries or scholars who currently study the effects of FDI in developing countries. There is an analysis of how public policies can further increase the attraction of FDIs, which is beneficial for public officials aspiring to absorb foreign investments in their area of oversight. The optimal geographical position of Albania and W.B. countries has played an essential role in attracting foreign investments for neighbouring countries and especially European Union countries. Central European countries such as Hungary, Austria, and Switzerland are leaders or significant investors in the region. The distance between host and recipient countries have been a dominant factor of FDI, as well as cultural and linguistic resemblances.

A Review of Blue Economy for Potential Growth of Foreign Direct Investment in Albania

This study investigates the potential impact of Blue Economy on attracting foreign direct investment (FDI). The analysis of the concept in terms of foreign investment is an additional contribution to the previous studies in this field. What we suggest is the development of crosscutting strategies in the development of the coastal economy, especially for developing countries such as Albania, as it would be a good opportunity for attracting foreign investment. Developing such a strategy supports the development of existing sectors, as well as the promotion of investment and innovation in the growth of new domains. Therefore there is a need to examine the necessary mechanisms for encouraging foreign investment in this sector (Blue Economy). The methodology of this paper is based on existing knowledge, observations and theoretical framework on Blue Economy.

International technology transfer: evidence on foreign direct investment in Albania

PurposeThe purpose of this paper is to examine the presumed role played by foreign direct investment (FDI) in transferring technology from home country into a host country. This paper uses data from Albanian manufacturing industry; first, to examine whether foreign presence results in technology transfer and, if yes, what type of technology is more prevalent and to what extent? Second, the paper attempts to investigate the purported determinants of technology transfer.Design/methodology/approachThe paper uses two main methodological approaches; first, the technology transfer was determined using an arithmetic index developed using simple arithmetic average. This index is determined using all the industries and taking six key components of technology into consideration. They included: products; production processes; technology and innovation; supplier and customers system; human resource management, training and reporting system; financial management, marketing and organizational structure. Second, assuming a limited dependent relationship between the variables and the technology transfer, a Tobit technique was proposed to examine the significant determinants of technology transfer. Technology transfer was proxied by the technology transfer index developed.FindingsThe results clearly demonstrate that FDI plays an important role in technology transfer and that notwithstanding the industrialization of Albania. As per the technology transfer index developed, product-related technology transfer ranked highest followed by the process-related technology. The Tobit results generated indicated that firm age, performance, absorptive capacity, labor mobility, innovation, demonstration effect and systematic support were all key determinants of technology transfer. Surprisingly, size of the firm did not seem to matter.Research limitations/implicationsThe results have possible managerial and policy ramifications. First, the government should continue to provide basic infrastructure. Second, the government needs to formulate policies focused on human capital accumulation. Third, policies should be focused on firm learning and innovation in order to build technological and absorptive capabilities. Moreover, there should be increased effort to facilitate and encourage R&D. Fourth, the government should coordinate and support the institutions especially those that play a crucial role in industrial investment promotion. Fifth, the government should encourage systemic interactions among different entities. Sixth, since high competition from foreign firms can crowd out domestic investment, strategic measures to regulate such competition should be enacted.Originality/valueThe novelty in this paper is the broad conceptualization of technology transfer to include not only the direct but also the indirect mode of technology transfer, which often takes place in the form of spillovers. The physical technology transfer, as well as, its actual impact in the economy is examined to ascertain that technology transfer indeed takes place. The analytical framework adopted overlaps international business, technology transfer and technological innovation literature strands to examine the holistic process of technology transfer.

Potential Growth Analysis of FDI in Albania

In this study analyzed 20 different countries that are the origin state of foreign investors, which have invested in Albania (this sample represents 95% of FDI (Foreign Direct Investments) stocks, 2007 - 2014). The analysis technic used is the gravity model of FDI stocks in Albania. The main independent variables in this analysis are GDP, the level of business taxes, the difference of GDP per capita, the similarity economies, etc. The result of this study: The level of FDI stocks in Albania is lower than its potential compare with FDI stock average in the States of the Balkan Region.

The Dynamics of Foreign Direct Investment in Albania. Comparison with the Western Balkan Region

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The Effect of Corporate Profit Tax on Attracting Foreign Direct Investment in Albania

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.

Business Climate Versus the Attraction of Direct Foreign Investments in Albania

There are statistics that foreign direct investments (FDI) in Albania have significantly declined. Business climate and skill of policies to attract FDI in Albania has apparently not impacted the promotion of investments from foreign businesses. This study assesses the business environment disadvantages and the readiness and availability of foreign investors to take risks with their investments in a foreign market facing the business climate of the host country, as well as the skill or failure of the latter for long term cooperation. Some basic components of the business climate in Albania, impact and their attractiveness to foreign investors will be analyzed and assessed. The research methodology selected for this study is the quantitative one, where a number of about 100 CEO and administrators of medium and big foreign companies in Albania have been planned to be interviewed. The measuring instrument will be standardized and after data collection, a series of analyses will be built such as correlation, means, standard deviations, frequencies, Chi-square (χ2) where the value p00.5. Analysis of variables will be realized through SPSS program. The study will be closed with relevant conclusions and recommendations.

Impact of Foreign Direct Investment on the Development of Agricultural Economy in the Area of Korça

Korca district is among the biggest districts in the Republic of Albania. With a total of 365 000 inhabitants, it is recognized as an area with developed agriculture and livestock, but as much as rich in tourist resources full of values. We will identify new unused resources mainly in agricultural products, which with their potential for increasing the income of rural residents, can directly affect the growth and development of Korca district. Real reflection of the situation in: (Drithas, Libonik, Lozhan, Mollas, Cumulus, Pojan, Maliq, Vithkuq, Bulgarec). Knowing the value of Foreign Direct Investment (FDI) as a mean for encouraging investment, stresses the need for accurate measurements and detailed statistics of FDI for assessing their relationship with economic growth and its impact on various economic sectors, mainly in the agricultural sector. The main goal is to identify the impact and the factors of prevention, in terms of increasing the flow of FDI in Albania. An important aspect of the purpose of this paper is to identify and assess the impact and the influence of FDI in Albanian agriculture, trends and issues or major obstacles to FDI in this sector, focusing in the Korca area and municipalities. In korca the inflow of foreign direct investment has played a role and has a significant impact on increasing productivity and efficiency of production, employment and domestic exports. The objectives of this study deal with the analysis of FDI as an important factor for developing countries in terms of globalization of the world economy as well as the direct or indirect impact they have on the Albanian economy with the main focus on agriculture. The specific objective of this paper is to identify and evaluate the competitive advantages of the area in order to attract foreign investment, with a focus on agriculture. In this context, to define how these advantages can be used and what the area needs, so it can attract more foreign investors. DOI: 10.5901/ajis.2016.v5n2p45

The Determinants of Foreign Direct Investment in Albania

The growth of FDI in Albania has been significant in recent years. The paper analyses most of determinants factor of FDI in Albania. It’s not so easy to identify all the determinants factors of FDI because depends on several characteristics that have country. In this paper, we analyze the theoretical determinants of FDI and then we focus to determine the determinants of FDI. It’s very important to determine the main determinants of FDI because in this way Albania can attract more foreign direct investment. The main determinants factors that we analyze are the size of our country, natural resources, quality of workforce, privatization process etc. DOI: 10.5901/ajis.2015.v4n3s1p524

Foreign Direct Investment and Economic Growth in Albania

Abstract Since the 1980s, foreign direct investment inflow (FDI) has grown significantly in most developing countries while pertaining Alania, foreign direct investment has started after the 1990s. A lot of developing countries have made policies aimed at reducing FDI barriers. Foreign capital globalization, particularly FDI inflow is increased significantly in developing countries, due to the fact that FDI is the most stable and prevalent component of foreign capital inflows (Adams, 2009) Foreign direct investments are a very important factor for the development of a country and Albania has still much to be done to encourage such investments, especially in the legislative framework. The authors are trying to give the answer to the question that how does foreign direct investment in the Albania affect the nation’s economy? The authors identify that foreign direct investment improves technology and has positive impact on economic growth. Because the overall theory is that FDI inflow enhances and sustains economic growth in the host country.

Foreign Direct Investments in Albania, Structure and Dynamics

After the fall of communism regime, Albania has become a host country to foreign direct investments (FDI) from many countries around the world. Albania represents four of the five types of FDI: those which gain access to specific factors of production; those which gain access to disposable production factors; those which gain access to Albanian consumer markets and those which organize joint ventures.Our country widely supports the FDI as there are no high taxation and commerce barriers to gain access to the new markets. Foreign direct investments are a very important segment of the economic activity of a country. In theory and also in practice, there are recognized the effects of FDI. They have brought significant positive effects on the economy. One of the advantages of FDI is that they help in the economic development of the country where is invested.FDI are usually applied in developing countries. During the 90s, they were one of the major external financial sources for most countries that had an economic growth perspective. FDI have been a significant support for some countries which faced economic difficulties.The main aim of this paper is to analyze the theoretical part and the relations of FDI in general.Another aim of this paper is to provide a general picture of FDI in Albania over the years, the main sectors where they are centralised, districts / cities where they are allocated, and so on.At the beginning it is given a theoretical framework, definitions and relations of FDI to various economic aspects.Then it is described the evolution in time and the development of FDI in different levels, for example in the countries of origin, currency in which it is mostly invested, main sectors, etc.There is also a comparison of FDI in Albania in relation to other countries in the region and beyond. We have mentioned here also the factors that affect FDI.

An Assessment Of Foreign Direct Investments Effects In Albania

In a country like Albania, Foreign Direct Investments (FDIs) are the main priority for economic growth and especially where they focus. Many developing countries (including our country) view these investments as unique opportunities to develop faster and increase the competition and the level of exports. We try to find in this work a link between FDIs and economic growth in Albania. We estimate in this framework some quantitative models, with some economic indicators as independent variables and with the level of foreign direct investment in Albania as a dependent variable. In this context, FDIs are dependent on many factors which can be classified as quantitative variables, like economic growth, average wages, foreign trade, GDP per capita, taxes, etc., and qualitative variables, like Index of Economic Freedom, infrastructure, secure internet servers, etc. DOI: 10.5901/mjss.2014.v5n22p218

The Effect of FDI in the Albania Economy

FDI has been a major development of the last decades helping world economic development. It is known that the growth in FDI (Foreign Direct Investment) is increasing at the global scenario. We see this increase in the last decade, especially in the developing countries like Albania. They are important for developing countries, in transition and developed countries. This paper will investigate the effect of the economic indicators on the FDI (Foreign Direct Investment) in Albania. For the research Methodology the data’s of FDI, GDP Growth, Inflation from 1992 – 2012 have been use for the purpose of studies. To check the normalcy of the data’s various statistical tools are used as: Mean, Standard Derivation, Variance and Kurtosis. Regression and Correlation analysis have been used to study the relationship dependency of these variables. The findings show that there is a visible effect of the economic indicators of Albania on the FDI (Foreign Direct Investment). The results of the correlation and regression analysis will be illustrated by graphs where they show the significant impact of the economic indicators of the FDI. This study investigates the impact of the economic indicators of Albania on the FDI with the use of the current statistics. DOI: 10.5901/ajis.2014.v3n3p421

Evaluation of Economic Growth in Albania in Relation to FDI and Other Indicators

Foreign Direct Investment are a very important segment of the economic activity of a country, due to the effects that they bring. Foreign Direct Investments in Albania are often considered as the locomotive of the country because of their concentration in important sectors of its economy. In theory, in literature and also in practice, the effects of foreign direct investments (FDI) are known. FDI have brought significant positive effects on the economy, but this certainly does not mean that the presence of FDIs in the economy of a country is not associated with adverse effects Specifically the main purpose of this paper is the theoretical viewpoint and the links that it suggests for FDI in general. One of the main links that the theory suggests is the connection between FDI and economic growth. But later, as the ultimate purpose, remains the connectivity testing of FDIs in the country with economic growth, to test the authenticity of their connection, finding out whether this connection is statistically significant or not. The structure of this paper is divided into three main parts. Initially is intended to provide a theoretical frame and to look at the definitions and links of FDI with various economic aspects. Secondly we will make an empirical analysis of FDI connection with economic growth, which can be viewed in two perspectives: the diagnostic (graphic) and statistical (econometric connection). Finally we will give the conslucions on this subject. DOI: 10.5901/ajis.2013.v2n3p239