Cross-sectional analysis of foreign direct investments (FDIs) in Albania

For developing countries, foreign direct investments (FDI) have had and continue to have an important role in meeting the strategic needs of the development of these countries. If a host country offers competitive advantages and untapped resources such as: lower production costs, unexploited natural resources, fiscal and legal incentives, etc., the development potential of FDI in that country will be very high. The main purpose of this paper is to provide an analysis of the performance of FDI with the focus in Albania as part of the Western Balkan. The paper reflects the connections between the macroeconomic indicators (GDP, GDP per capita, total tax rate, the distance between countries, and dummy variables) and the level of the stock of FDI in Albania. In order to explain these connections, it is used a cross-section analysis with a panel data of 21 origin countries of foreign investors in Albania, data are annual time series from 2007 to 2013. Furthermore, to analyze the existence of potential for attracting foreign investors in Albania likewise their concentration referred to economic activities or origin countries, it is used the analysis of Herfindal-Hirshman Index.