Title: Foreign direct investments and the role of governance and institutional quality in Albania

Authors: Mario Ҫurçija

Addresses: Department of Business Administration, Faculty of Economy, University of Shkoder 'Luigj Gurakuqi', Sheshi '2 Prilli', Shkoder, Albania

Abstract: Foreign direct investments in transition economies represent a small part of the total global inflows, but they show interesting dynamics, often in contrast to the global trend as is the case of Albania. Observation on specific features of each country suggests that a proper study of the phenomenon of FDI must not rely merely on macroeconomic models and thus ignore the peculiarities of each country. The aim of this paper is to assess the existence of the relationship between the quality of the institutions/policy and FDI inflows in Albania. In order to achieve this objective, we performed the Johansen co-integration test, the VAR and Granger's causality tests on a time-series dataset. The results show a substantial independence of the decisions taken by foreign investors from the country's internal policies. A possible explanation for these findings could be that investment decisions are mainly attributed to strategic decisions and exogenous determinants.

Keywords: foreign direct investment; Albania; transition economy; foreign investors; institutional quality; governance quality.

DOI: 10.1504/IJBG.2024.140051

International Journal of Business and Globalisation, 2024 Vol.37 No.4, pp.499 - 515

Received: 02 Apr 2020
Accepted: 12 Oct 2020
Published online: 17 Jul 2024 *

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