FDI in Albania: Rule of Law as a social Requisite for the development of a fair and not predatory market economy

• Pages: 56-63

Vol. 7 No. 2

July, 2021

Academic Journal of Business, Administration, Law and Social Sciences

IIPCCL Publishing, Graz-Austria

ISSN 2410-3918

Acces online at www.iipccl.org

56

FDI in Albania: Rule of Law as a social Requisite for the development of a

fair and not predatory market economy

Avenir Peka

Abstract

Foreign Direct Investment (FDI) plays an important and groing role in global business. For

thehostcountry,itcanprovdeasourceofnewtechnologies,capital,processes,products,and

managementskills, thusproviding itwith astrong impetusfor economicdevelopement.In

itsclasical denition,Foreign Direct Investmentis denedas acompany from onecountry

making a physical investment into building a factory in another country. The direct investment

inbuildings,machineryandequipementisin contrastwithmakinga portofolioinvestment,

whichisconsideredanindirectinvestment.

Proponentsofforeigninvestmentpointoutthattheexhangeofinvestmentowsbenetsboth

the home country and the host country. Opponents of foreign direct investments stress that

multinationalconglomeratesareabletowieldgreatpoweroversmallerandweakereconomies

and can drive out much of local competition.

Ofextremeimportanceindecidingtoinvestinaforeigncoutry,isthe‘newmarketaccess.Any

decision decision in investing is thus a combination of na number of key factors, including:

• Assessment of internal resouurces;

• Competitiveness;

• Market analysis;

• Market expectations

TwocategoriesaddressedbyWorldBank’s‘DoingBusiness’inrankingeconomiesoneaseof

doing business are ‘protecting investors’ and ‘contract enforcement’. The concept of Rule of

Lawanditspresenceinabusinesscultureimpactsbothofthesetopics.

The basic premise of the Rule of Law is that no one is above the law.This applies to

governmentaswellasthecommonpeople,anditcontrarytoauthoritariangovernmentsand

arbitraryrulesofprocessesoflaw.Inorderforbusinessestosucceed,RuleofLawisvital.It

requires the equitable application and enforcement of legislation, and safeguards of the rights

of individuals. It is also a concept that is not strongly embedded in the business culture of

developing countries.

Keywords:FDI,Albania,RuleofLaw,socialRequisite,marketeconomy.

Introduction

Politicians,lawyers,economistsandpolicy-makers,alldierentactors,oftenusethe

term“ruleoflaw”tocharacterizeacertaintypeoflegal-politicalregime.Asthepace

ofglobalization hasincreased inthepast twodecades, manydevelopingcountries

haveprioritizedtheirpolicyagendastopromotetheruleoflaw.

Theruleoflawdoesnothaveaprecisedenition,anditsmeaningcanvarybetween

dierentnationsandlegaltraditions.Generally,however,itcanbeunderstoodasa

legal-politicalregime underwhich thelaw restrainsthegovernmentbypromoting

certain liberties and creating order and predictability regarding how a country