ABSRJ 2019 Volume 10, Number 1

The effect of foreign direct investment in transition countries – case of Kosovo

Nexhat Shkodra
University of Gjilani “Kadri Zeka”, Republic of Kosovo

Xhevat Sopi
University of Gjilani “Kadri Zeka”, Republic of Kosovo

Myrvete Badivuku-Pantina
University of Prishtina “Hasan Prishtina”, Republic of Kosovo


The purpose of this paper is to establish that FDI has impact on improving some of the macroeconomic indicators influencing the economic development of transition countries, as well as Kosovo. In this paper, will be evaluated the impact of FDI on economic growth, income, labor and exports. The econometric model is based on linear regression (OLS), where each of the mentioned factors were tested with the same model, separately. The data were received by the Kosovo Agency of Statistics for the period 2004-2017. The results show that FDI has a positive impact on the economic growth of the current year with a 1% significance level (p = 0.0023), a positive impact on GDP growth per capita, lagged one year at a significant 10% (p = 0.0729); a positive impact on the export growth of the actual year with a significance level of 5% (p = 0.0105). As far as the impact of FDI in employment, the results are non-significant.

Keywords: foreign direct investment economic growth; OLS models; transition countries; Kosovo

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