IDEAS home Printed from https://ideas.repec.org/a/wei/journl/v9y2019i2p99-108.html
   My bibliography  Save this article

Business Environment and Foreign Direct Investment in Kosovo: an Overview of the Relationship Between Institutional Reforms and FDI

Author

Listed:
  • Hykmete Bajrami

    (University of Prishtina, Faculty of Economics, Prishtina, Kosovo)

  • Lulzim Krasniqi

    (South East European University, PhD Candidate, Tetove, North Macedonia)

Abstract

This paper analyses factors outlining the doing business environment, with reference to Kosovo, by focusing on some of the main determinants of attracting Foreign Direct Investments (FDI). It accentuates that in order to create favorable conditions to increase the flux of FDI, transition countries, including Kosovo, need to conduct a wide range of structural reforms, related not only to the reform of portfolios directly related to economy, but also to the improvement of the legal system and functioning of the democratic system in general. The paper used literature review and analysis of set of reforms undertaken from Kosovo institutions in order to attract FDI and improve the business environment. Moreover, the paper elaborates some of the important factors defining the doing business environment. There is a wide consensus in terms of recognizing the role of FDI for transition economies. Kosovo recognizes the significance of FDI and their impact on country economic development. For this purpose, its institutions have undertaken a range of reforms in terms of improving doing business environment. It is accentuated that Kosovo has many preconditions for increasing FDI inflows thanks to its natural resources, human capital, free access to major markets etc. However, apart from progress made in improving the doing business environment, Kosovo faces numerous challenges related not only to structural reforms of resources directly related to economy, but also with improving legal system and better functioning of the democratic system in general.

Suggested Citation

  • Hykmete Bajrami & Lulzim Krasniqi, 2019. "Business Environment and Foreign Direct Investment in Kosovo: an Overview of the Relationship Between Institutional Reforms and FDI," Economic Research Guardian, Mutascu Publishing, vol. 9(2), pages 99-108, December.
    • Handle: RePEc:wei:journl:v:9:y:2019:i:2:p:99-108
    as

    Download full text from publisher

    File URL: http://www.ecrg.ro/files/p2019.9(2)4y3.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fathi Ali & Norbert Fiess & Ronald MacDonald, 2010. "Do Institutions Matter for Foreign Direct Investment?," Open Economies Review, Springer, vol. 21(2), pages 201-219, April.
    2. Markusen, James R. & Venables, Anthony J., 1999. "Foreign direct investment as a catalyst for industrial development," European Economic Review, Elsevier, vol. 43(2), pages 335-356, February.
    3. International Finance Corporation & World Bank, "undated". "Doing Business in the Arab World 2012 : Doing Business in a More Transparent World," World Bank Publications - Reports 16303, The World Bank Group.
    4. James R. Markusen, 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 169-189, Spring.
    5. Busse, Matthias & Hefeker, Carsten, 2007. "Political risk, institutions and foreign direct investment," European Journal of Political Economy, Elsevier, vol. 23(2), pages 397-415, June.
    6. David A. Wernick & Jerry Haar & Shane Singh, 2009. "Do governing institutions affect foreign direct investment inflows? New evidence from emerging economies," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 1(3), pages 317-332.
    7. International Finance Corporation & World Bank, 2012. "Doing Business 2012 : Doing Business in a More Transparent World," World Bank Publications - Books, The World Bank Group, number 5907.
    8. Shang-Jin Wei, 2000. "How Taxing is Corruption on International Investors?," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 1-11, February.
    9. Cooper, Richard, 2001. "Growth and Inequality: The Role of Foreign Trade and Investment," Scholarly Articles 3677049, Harvard University Department of Economics.
    10. World Bank Group, "undated". "Doing Business 2020," World Bank Publications - Reports 32917, The World Bank Group.
    11. World Bank, 2019. "Doing Business 2019," World Bank Publications - Books, The World Bank Group, number 30438.
    12. Hadjila Krifa-Schneider & Iuliana Matei, 2010. "Business Climate, Political Risk and FDI in Developing Countries: Evidence from Panel Data," Post-Print halshs-00535798, HAL.
    13. Barrell, Ray & Pain, Nigel, 1999. "Domestic institutions, agglomerations and foreign direct investment in Europe," European Economic Review, Elsevier, vol. 43(4-6), pages 925-934, April.
    14. John Dunning, 2004. "Institutional reform, FDI and European Transition Economies," Economics Discussion Papers em-dp2004-14, Department of Economics, University of Reading.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tag, Mehmet Nasih & Degirmen, Suleyman, 2022. "Economic freedom and foreign direct investment: Are they related?," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 737-752.
    2. Krifa-Schneider, Hadjila & Matei, Iuliana & Sattar, Abdul, 2022. "FDI, corruption and financial development around the world: A panel non-linear approach," Economic Modelling, Elsevier, vol. 110(C).
    3. Tun, yin-li & Azman-saini, w.n.w. & Law, siong-hook, 2012. "International evidence on the link between foreign direct investment and institutional quality," MPRA Paper 65644, University Library of Munich, Germany.
    4. David A. Wernick & Jerry Haar & Latika Sharma, 2014. "The Impact of Governing Institutions on Foreign Direct Investment Flows: Evidence from African Nations," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 5(2), pages 1-12, March.
    5. Azzimonti, Marina, 2019. "Does partisan conflict deter FDI inflows to the US?," Journal of International Economics, Elsevier, vol. 120(C), pages 162-178.
    6. Federico Carril-Caccia & Juliette Milgram-Baleix & Jordi Paniagua, 2019. "Foreign Direct Investment in oil-abundant countries: The role of institutions," PLOS ONE, Public Library of Science, vol. 14(4), pages 1-23, April.
    7. Cristina JUDE & Grégory LEVIEUGE, 2013. "Growth Effect of FDI in Developing Economies: the Role of Institutional Quality," LEO Working Papers / DR LEO 2251, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    8. Cristina Jude & Gregory Levieuge, 2017. "Growth Effect of Foreign Direct Investment in Developing Economies: The Role of Institutional Quality," The World Economy, Wiley Blackwell, vol. 40(4), pages 715-742, April.
    9. Akhtaruzzaman, M. & Berg, Nathan & Hajzler, Christopher, 2017. "Expropriation risk and FDI in developing countries: Does return of capital dominate return on capital?," European Journal of Political Economy, Elsevier, vol. 49(C), pages 84-107.
    10. Charis Vlados & Dimos Chatzinikolaou & Michail Demertzis, 2020. "The Case of the European South on Entrepreneurship Enhancement Policies," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 10(1), pages 45-56.
    11. Economou, Fotini, 2019. "Economic freedom and asymmetric crisis effects on FDI inflows: The case of four South European economies," Research in International Business and Finance, Elsevier, vol. 49(C), pages 114-126.
    12. Manuel Portugal Ferreira & Helder Costa Carreira & Dan Li & Fernando Ribeiro Serra, 2016. "The Moderating Effect of Home Country Corruption on the Host Country’s Ability to Attract FDI," Brazilian Business Review, Fucape Business School, vol. 13(4), pages 94-117, July.
    13. Mariem Brahim & Houssem Rachdi, 2014. "Foreign Direct Investment, Institutions and Economic Growth: Evidence from the MENA Region," Journal of Reviews on Global Economics, Lifescience Global, vol. 3, pages 328-339.
    14. Laura Casi & Laura Resmini, 2014. "Spatial complexity and interactions in the FDI attractiveness of regions," Papers in Regional Science, Wiley Blackwell, vol. 93, pages 51-78, November.
    15. Andreia Olival, 2012. "The influence of Doing Business’ institutional variables in Foreign Direct Investment," GEE Papers 0048, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Dec 2012.
    16. Nikolaos Antonakakis & Gabriele Tondl, 2015. "Robust determinants of OECD FDI in developing countries: Insights from Bayesian model averaging," Cogent Economics & Finance, Taylor & Francis Journals, vol. 3(1), pages 1095851-109, December.
    17. Federico Carril-Caccia & Juliette Milgram Baleix & Jordi Paniagua, 2019. "The foreign direct investment-institution nexus in oil-abundant countries," Working Papers 1903, Department of Applied Economics II, Universidad de Valencia.
    18. Stoian, Carmen & Filippaios, Fragkiskos, 2008. "Dunning's eclectic paradigm: A holistic, yet context specific framework for analysing the determinants of outward FDI: Evidence from international Greek investments," International Business Review, Elsevier, vol. 17(3), pages 349-367, June.
    19. Yang, Jiao-Hui & Wang, Wei & Wang, Kai-Li & Yeh, Chung-Ying, 2018. "Capital intensity, natural resources, and institutional risk preferences in Chinese Outward Foreign Direct Investment," International Review of Economics & Finance, Elsevier, vol. 55(C), pages 259-272.
    20. Helmi Hammami & Moez Hammami & Siriki Coulibaly & Mariem Marzouk, 2020. "Determinants of FDI attractiveness: A MCI model approach," Economics Bulletin, AccessEcon, vol. 40(2), pages 1033-1048.

    More about this item

    Keywords

    Business environment; Foreign Direct Investment; Structural reforms;
    All these keywords.

    JEL classification:

    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wei:journl:v:9:y:2019:i:2:p:99-108. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mihai Mutascu (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.