THE EFFECT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH IN KOSOVO

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: