Foreign Direct Investment (FDI) was a key factors in shaping worlds economy
over the last couple of decades. During this period it grew faster than trade
and was considered vehicle of increasing integration of the world economy.
Despite being one of the poorest countries in Europe, Albania has managed
to attract solid interest from foreign investors. Albania offers access to a
growing market, to a competitive business environment, abundant availability
of well-educated workforce and in possibility of the first mover advantage in
some growing new markets. The government has made several economic
reforms to deliver an enhanced investment climate. The aim of this
dissertation is to assess and evaluate Albania’s attractiveness to FDI in order
to identify the policy implications required to increase inflows.
Throughout the critical analysis conducted during the literature review, the
author distils the ‘host country determinants’ framework based on the location
variable to assess and evaluate Albania’s attractiveness for FDI flows.
Results provided a number of incentives and disincentives features of
Albania’s host country determinants, leading the author to provide policy
implications, which aim at increasing inflows. FDI play an irreplaceable role
for the implementation of the strategic reforms, technology transfer and
advance managerial methods. Albania possesses all the essential
components to increase inward FDI but this will be explored through the
author’s own developed framework. The result of the analysis will produce
policy implications that aim to boost Albania’s future FDI inflows.
Table of Contents
1 INTRODUCTION
1.1 Chapter Overview
1.2 Academic Beckground
1.3 Context
1.4 Research Question and Associated Objectives
1.5 Structure of the Dissertation
2 FDI DEFINITION, THEORY AND EVIDENCE
2.1 Chapter Overview
2.2 Defining FDI
2.3 Flows of FDI
2.4 Types of FDI
2.5 FDI Theory
3 REVIEW OF LITERATURE ON HOST COUNTRIES ATTRACTIVENESS ON FDI
3.1 Chapter Overview
3.2 Host Country Determinants: Their Role and Importance
3.2.1 Political and Legal System
3.2.1.1 Political stability and Government effectiveness
3.2.1.2 Corruption and Bureaucracy
3.2.1.3 Rule of law
3.2.1.4 Taxation, Privatization and Trade policies
3.2.1.5 Investment incentives
3.2.2 General Macroeconomic Conditions
3.2.2.1 Market Size
3.2.2.1.1 GDP
3.2.2.1.2 Market growth
3.2.2.2 Economic stability
3.2.2.3 Economic openness
3.2.3 Resources
3.2.3.1 Natural resources
3.2.3.2 Infrastructure
3.2.3.2.1 Quality of transportation
3.2.3.2.2 Energy availability and costs
3.2.3.2.3 ICT infrastructure
3.2.3.3 Human capital and costs
3.3 Concluding Remarks
4 METHODOLOGY
4.1 Chapter Overview
4.2 Research Philosophy
4.3 Research Approach
4.4 Research Strategy
4.5 Time Horizons
4.6 Research Method
4.7 Quality of Research
4.8 Research Ethics
4.9 Research Limitations
5 ANALYSIS AND EVALUATION OF ALBANIA’s ATTRACTIVENESS TO FDI FLOWS
5.1 Chapter Overview
5.2 Albania: Country Profile
5.2.1 Albania’s Key Economic Indicators
5.3 Stylised Facts on Albania’s FDI
5.4 The Application of the Framework
5.4.1 Political and Legal System
5.4.1.1 Political Stability and Government Effectiveness
5.4.1.2 Corruption and Bureaucracy
5.4.1.3 Rule of Law
5.4.1.4 Taxation, Privatization and Trade Policies
5.4.1.5 Investment Incentives
5.4.2 General Macroeconomic Conditions
5.4.2.1 Market Size
5.4.2.1.1 GDP
5.4.2.1.2 Market Growth
5.4.2.2 Economic Stability
5.4.2.3 Economic Openness
5.4.3 Resources
5.4.3.1 Natural Resources
5.4.3.2 Infrastructure
5.4.3.2.1 Quality of Transportation
5.4.3.2.2 Energy Availability and Costs
5.4.3.2.3 ICT Infrastructure
5.4.3.3 Human Capital and Costs
5.4 Concluding Remarks
6 CONCLUSIONS
6.1 Chapter Overview
6.2 Summary of Findings
6.3 Policy Implications
6.4 Limitations and Profitable Avenues for Future Research
Research Objectives and Themes
This dissertation aims to assess and evaluate the attractiveness of Albania for Foreign Direct Investment (FDI) inflows. By examining existing theoretical frameworks and host country determinants, the research seeks to identify key factors influencing investment decisions in the Albanian context and to derive actionable policy implications to enhance future FDI inflows.
- Theoretical foundation of FDI and global investment trends
- Critical analysis of host country determinants including political, legal, and macroeconomic variables
- Evaluation of Albania’s current investment climate and economic performance
- Identification of barriers and opportunities for foreign investors in Albania
- Formulation of policy recommendations to boost inward investment
Excerpt from the Book
1.2 ACADEMIC BACKGROUND
Capital flows have been the main drivers of development for countries for centuries. Indeed, it could be said that FDI played a significant role from the ‘discovery’ of America in 1492, continuing with the colonization of territories by the developed countries and arriving to nowadays, where FDI facilitated by the widespread liberalization of capital flows, is an integral part of an integrated world economy and a main catalyst to development.
At the present, it is a competitive ‘must-do’ that firms invest all over the world to get access to markets, new technology and skills and ‘intelligence’. FDI data show clearly this trend toward globalization. The major flows of capital bring with it advanced technology to the host country which is difficult to produce through domestic savings or imported from abroad as technology transfer takes time, money and it is difficult to implement to firms with no previous experience. An important benefit of FDI to the domestic market is that it can also develop the human capital resources and aid the creation of new jobs. Thus far, the benefits of FDI are not accumulated automatically and evenly across countries, sectors and local communities. National policies and the international investment architecture determine the attractiveness of FDI toward a great number of developing countries and to achieve the full benefits of FDI for development (OECD, 2002).
Summary of Chapters
1 INTRODUCTION: This chapter introduces the topic of FDI, sets the context for the Albanian case, and defines the research question, objectives, and structure of the dissertation.
2 FDI DEFINITION, THEORY AND EVIDENCE: This chapter reviews theoretical and empirical literature regarding FDI, defines the concept, examines global trends, and explores various motivations and theories behind international production.
3 REVIEW OF LITERATURE ON HOST COUNTRIES ATTRACTIVENESS ON FDI: This chapter provides a critical literature review on potential factors influencing investor decision-making, leading to the development of a framework of host-country determinants.
4 METHODOLOGY: This chapter describes the research process, philosophical approach (positivism), and data collection methods used to conduct the study.
5 ANALYSIS AND EVALUATION OF ALBANIA’s ATTRACTIVENESS TO FDI FLOWS: This chapter applies the developed framework to analyze Albania's economic profile, its historical FDI trends, and evaluates specific determinants like political stability, economic openness, and infrastructure.
6 CONCLUSIONS: This chapter summarizes the findings of the study, provides policy recommendations to enhance Albania’s investment climate, and suggests avenues for future research.
Keywords
Foreign Direct Investment, FDI, Albania, Host Country Determinants, Economic Growth, Privatization, Investment Incentives, Macroeconomic Stability, Market Size, Infrastructure, Human Capital, Regulatory Environment, Political Stability, Trade Policy, Globalization
Frequently Asked Questions
What is the core subject of this dissertation?
The research focuses on analyzing the attractiveness of Albania as a host country for Foreign Direct Investment (FDI) inflows and identifying the specific factors that influence these investment decisions.
What are the central thematic areas of the research?
The study centers on three main pillars: political and legal systems, general macroeconomic conditions, and the availability of resources (infrastructure and human capital).
What is the primary objective of this work?
The primary goal is to evaluate Albania's attractiveness to FDI by utilizing a host-country determinants framework and to propose policy recommendations to increase future inward investment.
Which scientific methodology is applied?
The author adopts a positivistic research philosophy using a deductive approach and a case study strategy to systematically analyze secondary data and theoretical frameworks.
What is covered in the main body of the work?
The main body includes a critical review of FDI theories, an investigation into host country determinants, a detailed country profile of Albania, and an application of a synthesized analytical framework to the Albanian economy.
Which keywords best describe the work?
Key terms include Foreign Direct Investment (FDI), Albania, host country determinants, economic development, privatization, investment incentives, and macroeconomic stability.
How does the author view the influence of the global financial crisis on Albania?
The author observes that while Albania was relatively resilient during the crisis compared to other countries, the recession did lead to increased economic uncertainty and challenges for continued FDI growth in 2010.
What specific role does privatization play in the Albanian economy according to the text?
Privatization is highlighted as a critical tool for modernizing state infrastructure, attracting foreign interest in key sectors like banking and energy, and facilitating the transition to a market economy.
- Quote paper
- Besiana Buxheli (Author), 2010, What is the attractiveness of Albania for Foreign Direct Investment (FDI) flows? , Munich, GRIN Verlag, https://www.hausarbeiten.de/document/174187
