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The Impact of the Tax Rate and Average Wage Level on FDI: The Case of Albania

Author

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  • Entela Velaj

    (University “Aleksandër Moisu”, Albania)

  • Olta Nexhipi

    (University “Aleksandër Moisu”, Albania)

Abstract

The purpose of this work is to study the factors that have an impact on foreign direct investments in Albania. The data taken into consideration belong to the period 2005-2019. The data are quantitative and secondary. Their source is the World Bank, the Ministry of Finance and Economy and INSTAT. Albania is a developing country and for this reason foreign direct investments are of great importance for its economy. The increase in investments creates new jobs, the increase in individual income, the increase in consumption and thus the economic growth of a country. The data were tested with the SPSS statistical program. The EURO/ALL exchange rate, merchandise trade, the annual increase in the country's average wage and the total rate of taxes and contributions paid by a company were taken as independent variables. The total tax rate and the exchange rate negatively affect the growth of foreign direct investments. This impact is significant. Merchandise trade has a positive effect on the growth of investments and also this impact is significant. The average wage level of the country has a negative effect on foreign direct investments, but this effect is not significant.

Suggested Citation

  • Entela Velaj & Olta Nexhipi, 2023. "The Impact of the Tax Rate and Average Wage Level on FDI: The Case of Albania," European Journal of Business and Management Research, European Open Science, vol. 8(2), pages 126-131, March.
    • Handle: RePEc:epw:ejbmr0:v:8:y:2023:i:2:id:51846
    DOI: 10.24018/ejbmr.2023.8.2.1846
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