HARMONIZATION OF THE LEGISLATION OF FOREIGN INVESTMENTS OF THE DEVELOPING COUNTRIES WITH THAT OF THE EUROPEAN

Abstract

Foreign investment plays a crucial role in a country’s development. Seen from the perspective of the importance of the impact of foreign capital investment on the host and country of origin, the main purpose of this study is to analyze the compatibility of Kosovo’s foreign investment legislation with that of the European Union (EU) to further emphasize the importance of the judiciary and law enforcement as influential factors in attracting foreign investment in the case of Kosovo. Through descriptive, comparative, and analytical research, this study analyses the legal framework for foreign direct investment (FDI) in Kosovo in comparison with the EU. A new database of FDI incentives shows that providing financial incentives to foreign investors is quite common for countries trying to attract investors seeking efficiency (Andersen et al., 2017). The paper concludes that the absorption of foreign investment requires well-defined policies and strategies, continuous improvements in the legal and institutional framework, political stability and sustainable economic growth, improvement and modernization of infrastructure, as well as climate improvements for the business environment and investment. Based on the Organisation for Economic Co-operation and Development (OECD, 2008), FDI is a key element in this rapidly evolving economic integration, also referred to as globalization, thus FDI provides a means of establishing direct, lasting links between economies.