FDI inward policy in Kosovo: A critical analysis

• Author: MBA Flamur Bunjaku
• Position: Prishtina University 'Hasan Prishtina'
• Pages: 63-67

ISSN 2410-759X Balkan Journal of Interdisciplinary Research Vol 1 No 1

Acces online at www.iipccl.org IIPCCL Publishing, Tirana-Albania May 2015

63

FDI inward policy in Kosovo: A critical analysis

MBA Flamur Bunjaku

Prishtina University “Hasan Prishtina”

Abstract

e importance and positive eects of FDI inwards are multilateral. ere is a wide consensus

among scholars that FDI inwards positive eects for the host country outweigh cost of such an

engagement. However, there are some scholars who approach to the FDI inwards with skepticism.

In addition, some relevant international organizations such as OECD (2002) suggest that FDI

positive eects depend on the business environment, institutional – legal aspects, structure of the

economy, and so forth. e idea of this paper is not to under evaluate the importance of FDI

inwards. On the contrary it approaches to the FDI inwards policies with a dose of criticism in

order to maximize their positive eects. We consider that current FDI inwards policy in Kosovo

doesn’t take into account the specics of the economy, business environment, adequate entry

modes and cross – sector FDI distribution. What is most important it doesn’t take into account the

idea of directing FDI inwards to the strategic sectors of Kosovo economy, especially to production

activities directed to export? e paper suggests a revision of current FDI inward policy of Kosovo,

since it is not in compliance with long term needs of the economy. e paper also provides data

regarding the levels of FDI inwards in Kosovo by sectors.

Key words: FDI, Kosovo, etc.

Introduction

e fall of the communist rule in all states of central and southeast Europe on the last

decade of 20th century was followed by the establishment of democracy and the pluralist

political system. e central planned economy was replaced with a liberal one, based on

free market, opening the route to free business initiatives, of both domestic and foreign

origin. Most of the southeast European countries travelled together in this journey,

except Kosovo, which because of not resolved political problems, resulting with war in

1998, had to wait for the democratic changes until the end of the year 1999. Aer the war

in Kosovo in 1999, following the resolution 1244 of United Nations Security Council,

UNMIK (United Nations Mission in Kosovo) was established. UNMIK remained to be

the main authority in Kosovo up to the year 2008 when Kosovo parliament declared the

independence. e role of international community, respectively the United Nations

role was crucial in the aspect of building up provisional institutions and establishing a

legal framework. e establishment and enforcement of such a framework was crucial

instrument in generation of an overall normal business climate. Since then many foreign

companies started to invest in Kosovo bringing a radical change to the business picture,

as well as changing the old archaic mentality in doing business.

e subject of FDI in Kosovo has been dominated by the arguments and counterarguments

regarding the quantitative aspects of FDI inwards. However, there has been an extreme

lack of debate regarding the FDI qualitative aspects, such as their structure, entry modes,

government incentives, legal issues regulating the FDI activities, and so forth. erefore,

this paper approaches to the FDI inwards policy in a critical manner aiming to identify

the main drawbacks of FDI policy in Kosovo.