The effect of foreign investment on the economic growth with a special focus on Kosovo

• Author: Valmir Zogaj - Kestrim Avdimetaj
• Position: University of Peja 'Haxhi Zeka', Kosovo - University College 'Fama', Kosovo
• Pages: 166-175

Vo

l. 4 N

o

.

3

N

ovem

b

er

,

2018

A

cademic Journal o

f

Business,

A

dministration, Law and Social Science

s

II

PCCL Publishin

g

, Graz-

A

ustri

a

I

SSN 2410-391

8

A

cces online at www.ii

p

ccl.or

g

1

66

The e ect of forei

g

n investment on the economic

g

rowth with a special focus

o

n K

oso

v

o

M

sc.Va

l

mir Zoga

j

U

niversity o

f

Peja “Haxhi Zeka“, Kosov

o

P

h

D (C.) Kestrim Av

d

imeta

j

U

niversity College “Fama“, Kosov

o

Ab

str

a

c

t

The main aim of this scientifi c work is to show in concrete way the role and impact of foreign

direct investment on the economic development, where Kosovo will be analyzed with a

special focus. Through this study, we will investigate the correlation between Foreign Direct

I

nvestment and the

E

conomic Growth in Kosovo during the time spam from 2005-2016. To

t

est the data and results, we will use di



erent econometric models and methods in order that

t

he results have a higher scientifi c signifi cance, such as the Narrative Method, Comparative

M

ethod, as well as the

E

conometric Method. Testin

g

of the data and the buildin

g

of the

econometric model will be realized by using the econometric method, concretely by using the

m

ethod of Pooled

O

LS and the analysis of Correlation. The source of the data will be quite

diversi

fi

ed and multi

f

arious, based on data

f

rom the Central Bank o

f

Kosovo, the

A

gency o

f

Statistics, the

I

nternational Monetary Fund, as well as the Macroeconomics

I

ndicators of The

World Bank. The main fi nding of this study is the existence of the positive relation between

t

he Foreign

I

nvestment and the

E

conomic Growth, more concretely, according to the results

from the

E

conometric Model, we see that if the Forei

g

n Direct

I

nvestment in Kosovo

g

rows

b

y 1%, it will a ect positively the

E

conomic Growth by (67.27%). Some of the limits of this

study are that other countries of the West Balkans are not included, as other explanatory

v

ariables. Therefore, in future it must be supported by other specifi c studies that treat the

connection between the

E

conomic Growth and Forei

g

n

I

nvestment. The data and results from

t

his research could be used by di erent users and parties.

Ke

y

words: Foreign Direct

I

nvestment (FD

I

), Gdp Per Capita,

E

conomic Growth,

E

conometric

Mo

d

e

ls.

I

ntr

oduc

t

io

n

Foreign

I

nvestment is understood as an engagement o

f

fi

nancial means in order to

gain monetar

y

means out o

f

the investor’s original countr

y

, thus a



ecting the economic

growth o

f

the countr

y

where the investment is made. Regarding the Foreign Direct

I

nvestment there is as considerable number o

f

de

fi

nitions according to (Moosa, 2002)

Foreign

I

nvestment

p

resents the

p

rocess o

f

gaining the ownershi

p

right o

f

assets

f

rom the countr

y

o

f

origin, aiming the

p

roduction control, distribution and other

enter

p

rise activities in another countr

y

, res

p

ectivel

y

in a

f

oreign countr

y

. Foreign

I

nvestment is more

p

re

f

erred in the countries which are in

p

rocess o

f

develo

p

ment,

more concretel

y

in the countries on transition

f

or e.g. the West Balkan countries

among t

h

em Kosovo too, t

h

an in t

h

e countries w

h

ere t

h

e economic

d

eve

l

o

p

ment