THE EFFECT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH IN KOSOVO

Isuf Qabrati

Abstract


Foreign direct investment plays a very important role in the economic development of countries, especially in countries in transition. Foreign direct investment is defined as any investment where the investor invests in a foreign country the factors of production including labor, financial capital, technology and professional management knowledge. FDI can ensure financial stability, promote economic development and improve social welfare. The purpose of this paper is to investigate the impact of FDI on Kosovo's economic growth, for the years 2007-2017. In particular, the paper aims to measure the effect that FDI has had on GDP over the years, examining the impact of FDI by economic activities on economic growth, expressed in GDP. Two basic variables were used: the independent variable (FDI) and the dependent variable (GDP). To measure the effect of the independent variable on the dependent variable, the data realized for these two variables were collected by the relevant public institutions. From the derived data, the results of the regression analysis show that FDI has a significant effect on economic growth. The change in economic growth depends almost entirely on the change in FDI by sectors of economic activity.

JEL: E20, E22

Article visualizations:

Hit counter


Keywords


foreign direct investment, economic growth, gross domestic product

Full Text:

PDF

References


Adefabi, R. A. (2011). Effects of FDI and human capital on economic growth in Sub-Saharan Africa. Pakistan journal of social sciences, 8(1), 32-38.

Alfaro, L., & Matthew, J. (2012). Foreign Direct Investment and Growth. Boston: The Evidence and Impact of Financial Globalization, Harvard Business School.

Alvaro, L., Chanda, A., Kalemli-Ozcan, S., and Sayek, S. (2006). How Does Foreign Direct Investment Promote Economic Growth? Exploring the Effects of Financial Markets on Linkages, Working Paper 07-013.

Anwar, S., & Nguyen, L. P. (2010). Foreign Direct Investment and Economic Growth in Vietnam. Asia Pacific Business Review, 16(1-2), 183-202.

Bartels, F. L., & Crombrugghe, S. (2009). FDI Policy Instruments: Advantages and Disadvantages. Vienna: United Nations Industrial Development Organization.

Bengoa, M., & Sanchez-Robles, B. (2003). Foreign direct investment, economic freedom and growth: new evidence from Latin America. European journal of political economy, 19(3), 529-545.

Çakërri, L. (2019). Ndikimi i Investimeve të Huaja Direkte mbi Rritjen Ekonomike në Shqipëri: Roli i Kapacitetit Absorbues. Tiranë: Universiteti i Tiranës, Fakulteti i Ekonomisë.

Denisia, V. (2010). Foreign Direct Investment Theories: An Overview of the Main FDI Theories, European Journal of Interdisciplinary Studies, No. 3.

Dritsaki, C., & Dritsaki, M. (2012). Exports and FDI: A Granger causality analysis in a heterogeneous panel. Economics Bulletin, 32(4), 3128-3139.

Dritsakis, N., & Stamatiou, P. (2014). Exports, foreign direct investment, and economic growth for five European countries: Granger causality tests in panel data. Applied Economics Quarterly, 60(4), 253-272.

Falki, N. (2009). Impact of foreign direct investment on economic growth in Pakistan. International Review of Business Research Papers, 5(5), 110-120.

Javorick, B. S. (2004). Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages. American Economic Review, 94(3), 605–627.

Jyun-Yi, W., & Chih-Chiang, H. (2008). Does foreign direct investment promote economic growth? Evidence from a threshold regression analysis. Economics Bulletin, 15(12), 1-10.

Kilic, C., Bayar, Y., & Arica, F. (2014). Effects of currency unions on foreign direct investment inflows: the European economic and monetary union case. International Journal of Economics and Financial Issues, 4(1), 8.

Kukaj, H., & Ahmeti, F. B. (2016). The importance of foreign direct investments on economic development in transitional countries: a case study of Kosovo. European Scientific Journal, 12(7).

Louzi, B. M., & Abadi, A. (2011). The impact of foreign direct investment on economic growth in Jordan. IJRRAS-International Journal of Research and Reviews in Applied Sciences, 8(2), 253-258.

Maku, O. (2015). Macroeconomic Consequences of Foreign Direct Investment in Nigeria: An Empirical Analysis. European Journal of Business and Management, 7(22).

Mehic, E., Silajdzic, S., & Babic-Hodovic, V. (2013). The impact of FDI on economic growth: Some evidence from Southeast Europe. Emerging Markets Finance and Trade, 49(sup1), 5-20.

Mottaleb, K. A. (2007). Determinants of foreign direct investment and its impact on economic growth in developing countries.

Omri, A. (2014). The nexus among foreign investment, domestic capital and economic growth: Empirical evidence from the MENA region. Research in economics, 68(3), 257-263.

Pegkas, P. (2015). The impact of FDI on economic growth in Eurozone countries. The Journal of Economic Asymmetries, 12(2), 124-132.

Siddique, H. M. A., Ansar, R., Naeem, M. M., & Yaqoob, S. (2017). Impact of FDI on economic growth: Evidence from Pakistan. Bulletin of Business and Economics, 6(3), 111-116.




DOI: http://dx.doi.org/10.46827/ejefr.v5i1.1091

Refbacks

  • There are currently no refbacks.


Copyright (c) 2021 Isuf Qabrati

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

The research works published in this journal are free to be accessed. They can be shared (copied and redistributed in any medium or format) and\or adapted (remixed, transformed, and built upon the material for any purpose, commercially and\or not commercially) under the following terms: attribution (appropriate credit must be given indicating original authors, research work name and publication name mentioning if changes were made) and without adding additional restrictions (without restricting others from doing anything the actual license permits). Authors retain the full copyright of their published research works and cannot revoke these freedoms as long as the license terms are followed.

Copyright © 2016 - 2023. European Journal of Economic and Financial Research (ISSN 2501-9430) is a registered trademark of Open Access Publishing Group. All rights reserved.

This journal is a serial publication uniquely identified by an International Standard Serial Number (ISSN) serial number certificate issued by Romanian National Library. All the research works are uniquely identified by a CrossRef DOI digital object identifier supplied by indexing and repository platforms. All the research works published on this journal are meeting the Open Access Publishing requirements and standards formulated by Budapest Open Access Initiative (2002), the Bethesda Statement on Open Access Publishing (2003) and  Berlin Declaration on Open Access to Knowledge in the Sciences and Humanities (2003) and can be freely accessed, shared, modified, distributed and used in educational, commercial and non-commercial purposes under a Creative Commons Attribution 4.0 International License. Copyrights of the published research works are retained by authors.