The impact of foreign direct investments on economic growth and employment in Albania

AuthorLorena Çakërri - Filloreta Madani
PositionUniversity 'Ismail Qemali 'Vlorë , Albania
Pages148-156
Vol. 2 No. 2
June, 2018
European Journal of Economics, Law and Social Sciences
IIPCCL Publishing, Graz-Austria
ISSN 2519-1284
Acces online at www.iipccl.org
148
The impact of foreign direct investments on economic growth and employ-
ment in Albania
PhD (C.) Lorena Çakërri
University “Ismail Qemali “Vlorë , Albania
Assoc. Prof. Filloreta Madani
University “Ismail Qemali “Vlorë, Albania
Abstract
Albania has experienced a growing performance of FDI in ows a er the 1990s. This has been
due to the fact that Albania has managed to create a liberal regime for foreign investment.
This positive a itude towards these nancial ows derives from the prospect of bene ting
from them. These positive e ects driven by foreign investors are diverse in terms of economic
growth, the spread of technologies, the improvement of de cits, employment, technology,
and so on. The purpose of our paper is to investigate some of the e ects of foreign direct
investment. We will analyze the impact of FDI on economic growth, technology transfer, gross
capital formation, budget de cit nancing through a descriptive analysis of data published by
various institutions such as World Bank, UNCTAD and Ministry of Finance etc. The impact
of FDI in ows into employment levels will be investigated through an econometric analysis
based on secondary data.
Keywords: foreign direct investment, technology transfer, employment, economic growth,
gross xed capital formation.
Introduction
Albania, like other developing countries, is characterized by friendly policies in
the absorption of foreign direct investment ows. This is because of the absence of
domestic capital. Foreign investment is one of the most important sources of economic
development in the country. The expected positive e ects in the host country spread
in many dimensions. Foreign investment brings advanced technology, helps in gross
xed capital formation, helping the country's economic growth. But one of the most
desirable e ects is the level of employment. This is because employment is an indicator
of economic condition and it is also a social indicator. Albania is characterized by
low levels of employment. A er the collapse of communism, employment became a
plague for the Albanian economy. Although Albania has absorbed a satisfactory share
of foreign investment in the region1, employment performance has not re ected this
trend.
1 According to: The Vienna Institute for International Economic Studies, Albania was ranked sec-
ond in the region, a er Serbia for the volume of in ows of foreign direct investment in 2016. h ps://
wiiw.ac.at/press-release-wiiw-fdi-report-2017-english-pnd-36.pdf.

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