Assessment of the Impact of Economic Factors in Attracting FDI. The Case of Albania

The main objective of this paper is to identify the economic factors with significant impact on foreign direct investments (FDI) in Albania and the parametric measurement of the effect of each of these factors in attracting FDIs. We have developed time series analysis based on quarterly data of the macroeconomic indicators for the period 1993-2015. The dependent variable of the study is the value of FDI inflows and independent variables are: the value of the gross domestic product (GDP), the value of investment with domestic capital, the level of economic openness, revenues from privatization, inflation rate, the number of the employees, and the level of tax burden on businesses. The impact assessment is done through elastic multiple regression analysis. The results of the study indicated that FDIs in Albania are positively and statistically significant correlated with the variables: GDP and the number of employees. A negative relation is identified with the domestic capital investments and the level of tax burden. Other variables have no significant effect on the elasticity of FDIs. The paper provides conclusions for Albanian policy makers in designinf policies for attracting FDI as it is based on estimations of FDIs parametric elasticity to the main macroeconomic indicator