Does FDI in?uence economic growth in Albania?

AuthorAurel Koroci
PositionAlexander Moisiu University of Durres
Pages144-151
Vol. 4 No. 1
March, 2018
Academic Journal of Business, Administration, Law and Social Sciences
IIPCCL Publishing, Graz-Austria
ISSN 2410-3918
Acces online at www.iipccl.org
144
Does FDI in uence economic growth in Albania?
Dr. Aurel Koroci
Alexander Moisiu University of Durres
Abstract
Foreign direct investment (FDI) has been viewed as a power a ecting economic growth
(EG) directly and indirectly during the past few decades. Foreign direct investment (FDI)
in developing countries brings economic development and enhances the international
competitiveness of domestic enterprises. It is argued in the existing literature that foreign
direct investment (FDI) in uences economic growth through technology di usion, human
capital formation, etc. FDI accounts for the largest and most important proportion of foreign
capital in Albania, which undoubtedly plays an important role in the Albania’s economic
development growth. However, as the country’ s FDI increases, and in this paper I want to
make an empirical research how the FDI has in uenced the economic growth of the country.
The ndings revealed that there is a strong positive relationship between the FDI in ows
and the GDP for the studied period which covers 1995 to 2012, thus a positive e ect on the
economic growth.
Keywords: FDI, GDP growth, Albania.
Introduction
In discussion of FDI role in theory of economic growth, rst we must examine what
is the source of economic growth? In macroeconomics, economic growth corresponds
to a long-term problem. How to explain the macro-economic growth? In modern
economics, economic growth is a ributed to three main factors: capital, labor,
and technological progress. At the same time, we can see FDI as a foreign capital,
therefore, from this sense; FDI promotion of economic growth in the host country has
its theoretical foundation.
Since last century’s early 90s a er the end of the Cold War, economic globalization
speeded up and in this process, foreign direct investment (FDI) and economic
globalization promoted each other; international direct investment became a link of
economic globalization, the network of national economies are linked together by
transnational corporations, while the economic globalization process accelerated the
operations and direct investment of multinational corporations around the world’s
emerging countries. At present, by seeing direct investment as main factor of speeding
up economic globalization process, foreign direct investment have presented a number
of notable features: (1) Most of the international direct investment ows to emerging
markets from developed countries but in recent years mutual investment between
emerging countries is also increasing; (2) the operation of foreign investment factors
increasingly focuses on the larger multinational companies; (3) Investment directions
are mostly inclined to labor-intensive industries and service related industries;
(4) increasing international direct investment has become the link of increase and

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