Impact of FDI on GDP and Unemployment in Macedonia Compared to Albania and Bosnia and Herzegovina

  • Agim MamutiEmail author
  • Mehmed Ganic
Conference paper
Part of the Advances in Science, Technology & Innovation book series (ASTI)


The main aim of this research is to investigate whether Foreign Direct Investment (FDI) affects economic growth and employment rate in the selected countries of Western Balkan region (Albania, Macedonia and Bosnia and Herzegovina). The hypothesized relationship between FDI and economic growth and unemployment rate was investigated using real and official data of FDI inflows as well as GDP for period between 2005 and 2015. Methodology used in the study is a multiple regression. Findings indicated that considering three countries of Western Balkans, FDI has considerable influence over their economic growth, except for the case of Bosnia and Herzegovina (B&H) where hypothesis has been rejected meaning that FDI has no considerable influence over economic growth in this country. On the other hand, when it comes to Albania and Macedonia, hypothesis was accepted which proved that FDI is significant contributor to economic growth of these two countries. In the last two decades, Macedonia has been one of the leading receivers of FDI, compared to other countries from Balkans, mainly compared to Albania and Bosnia and Herzegovina.


FDI GDP Employment Developing countries Financial crisis 


  1. 1.
    WB: International Finance Corporation, pp. 5–15. FYR Country Profile, Macedonia (2013)Google Scholar
  2. 2.
    International Monetary Fund: Selected Issues for Former Yugoslav Republic of Macedonia, pp. 15–27 (2010)Google Scholar
  3. 3.
    European Commission: Progress Report on Macedonia, pp. 47–53 (2006)Google Scholar
  4. 4.
    World Bank Group—FYR Macedonia Partnership Country Program Snapshot (April 2015)Google Scholar
  5. 5.
    Ganić, M.: The effects of foreign direct investment flows in developing process of countries of Western Balkan (31 Oct 2013). Available at SSRN: or
  6. 6.
    Caves, R.: Multinational Enterprise and Economic Analysis. Cambridge University Press, Cambridge (1982)Google Scholar
  7. 7.
    Dunning, J.H.: Determinants of international production. Oxf. Econ. Pap. 25(2), 35–57 (1973)Google Scholar
  8. 8.
    Dunning, J.H.: Multinational Enterprise and the Global Economy. Addison Wesley, Wokingham (1993)Google Scholar
  9. 9.
    Grosse, R., Trevino, L.J.: Foreign direct investment in the United States: an analysis by country of origin. J. Int. Bus. Stud. 27(1), 139–155 (1996)CrossRefGoogle Scholar
  10. 10.
    Ajami, A.R., Bar Niv, R.: Utilizing economic indicators in explaining foreign direct investment in the U.S. Manag. Int. Rev. (Germany) 24(4), 16–26 (January 1984)Google Scholar
  11. 11.
    Kurtishi-Kastrati, S.: Impact of FDI on economic growth: an overview of the main theories of FDI and empirical research. Eur. Sci. J. 9(7), 56–77 (2013)Google Scholar
  12. 12.
    Kurtishi-Kastrati, S.: The effects of foreign direct investments for host country’s economy. Eur. J. Interdiscip. Stud. 5(1), 26–38 (2013)Google Scholar
  13. 13.
    Gjanҫi, G.: The role of FDI inflow on the post-communist Albania’s economic growth. J. Knowl. Manag. 4(2) (2014)Google Scholar
  14. 14.
    Vangjeli, A., Abazi, X.: Impact of foreign direct investment on economic growth of Albania. Glob. J. Res. Anal. 3(3), 25–27 (2014)CrossRefGoogle Scholar
  15. 15.
    Lleshaj, L., Malaj, A.: The impact of foreign direct investments (FDIs) on economic growth: the solow model in the case of Albania. Eur. J. Econ. Bus. Stud. 4(1), 152–162 (2016)CrossRefGoogle Scholar
  16. 16.
    Görgülü, E.M.: The effects of foreign direct investments on transition economies: the balkans case. J. Econ. Soc. Stud., 23–39 (2015)Google Scholar
  17. 17.
    Shehaj, E., Haderi, S.: FDI and economics growth in Macedonia. Int. J. Econ. Commer. Manag. 3(7), 96–111 (2015)Google Scholar
  18. 18.
    Krstevska, A., Petrovska, M.: The economic impacts of the foreign direct investments: panel estimation by sectors on the case of Macedonian economy. J. Cent. Bank. Theor. Pract., 55–73 (2012)Google Scholar
  19. 19.
    Stanisic, N.: Do FDI increase the economic growth if South Eastern European transition economies. South-Eastern Eur. J. Econ., 29–38 (2008)Google Scholar
  20. 20.
    Palinescu, E., Radulescu, M.: The impact of FDI on the economic growth and countries’ export potential. Rom. J. Econ. Forecast., 153–169 (2009)Google Scholar
  21. 21.
    European Commission: Directorate-General for Economic and Financial Affairs. The Western Balkans in Transition. European Economy, Occasional Papers No. 46 (2009)Google Scholar
  22. 22.
    Zahra, S.A., George, G.: Absorptive capacity: a review, reconceptualization and extension. Acad. Manag. Rev. 27(2), 185–203 (2002)CrossRefGoogle Scholar

Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  1. 1.Mother Teresa UniversitySkopjeMacedonia
  2. 2.International University of SarajevoSarajevoBosnia and Herzegovina

Personalised recommendations