The Impact of Foreign Direct Investments on the Economic Growth and Export Potential of Albania

Abstract

Foreign Direct Investments (FDI) has a positive impact upon the economic growth in the receiving countries. The countries in
transition need FDI not just to produce more goods and a higher quality. Foreign capital investments are the most efficient and safe way
to integrate into the world economy. FDI would allow the re-specialization of the economy to surpass the situation of maintaining on the
world markets only with food products and raw materials. Indeed, the acquired experience shows that FDI plays a determinant role in
respecialising the transition economies and in increasing the export potential. A transition country like Albania is assumed to benefit from
FDI not only by supplementing domestic investment, but also in terms of employment creation, transfer of technology, increased
domestic competition and other positive externalities. Albania offers attractive investment opportunities for foreign companies and has
adopted a number of policies to attract FDI into the country and the country seems to offer perhaps one of the most liberal FDI regimes
in region. Our analysis in this paper, based on economic evidence over recent years, indicates that FDI and trade contribute significantly
towards advancing economic growth in Albania. Further, we shall examine some structural changes which occurred under the influence
of FDI in the Albanian economy and in Balkan region, drawing also the attention upon the changes in the export potential of those
countries.