Foreign Direct Investments In Albania Finance Essay

Albania is a underdeveloped state. Even it has the lowest criterion of life, since 1990 it is seeking to work out its jobs at the economic system. It is seeking really hard to better the life and the economic system, particularly at the pulling investors. With financial reforms under manner, advancement in the battle against corruptness, low rising prices rates and a negative trade balance, Albania is pulling more foreign direct investings ( FDI ) with high profitableness and low labour costs[ 1 ]. Experience has shown that foreign direct investing has had a major impact on the economic growing of a state[ 2 ].

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That ‘s why we have decided to give a image how the FDI has been impacting in our state ‘s economic system during these latest old ages.

In this paper we will make an overview of FDI in Albania. We are traveling to demo where are the FDI most concentrated in chapter 2, which are the most preferable sectors for the investors in chapter 2.1. How has been the flow of the foreign direct investings during these latest old ages in chapter 2.2, and a comparing with other states at the part in chapter 3, usually except Greece where the development is much higher so the other states of Balkan. Finally, we will show the decisions of our work in chapter 4.

Foreign Direct Investments in Albania

Foreign Direct Investments ( FDI ) is called any signifier of investing that earns involvement in endeavors which function outside of the domestic district of the investor[ 3 ]. There is a relationship between the parent company and its foreign sub journal. Investings are created non merely to increase the income of the state that invest but besides to develop the state that is invested.

The most preferable sectors for investors

Foreign direct investing in the industrial sector divided into several sub classs other.A Light industry, which includes fabric and vesture industry, which is one of the Godheads of the work the most of import industry of leather and shoe, which besides constitutes an of import sector as the economic and societal.

In 2006, exports of fabrics and vesture corresponded to 29 % of overall exports.A Currently, there are 52 foreign garment companies with over 50 employees that account for 60 % of the work force employed in the garment sector[ 4 ]. These houses are owned preponderantly by Italian and Grecian investors. The largest companies are located in the biggest metropoliss of the state, such as Korca, Tirana and Durres.

Besides leather and shoe sector constitutes 10 % of the industrial production and about 14 % of the employment. Albanian leather and shoe exports have late increased by 20-30 % yearly. In 2006 exports of footwear accounted for 26 % of entire exports. These sectors are more preferred because of the work force is great and inexpensive compared with those states operating.A Besides the authorities and advancing financial and legal installations, make Albania one of the states attract FDI.

Agribusiness and agro-industry sectors are one of the most of import in our state, because Albania has really fertile land. Besides the clime of this state is really favourable for the cultivation of different types of workss and trees.A This sector of the economic system contributes 25 % of GDP and 60 % of employment. But foreign investing in this sector, compared with other sectors of the economic system, are smaller.A One of the grounds is technological backwardness.A Besides many states produce different merchandises individually and artificially.A Exports for this sector reach merely 8 % of entire exports.A However agribusiness is considered a possible sector that could be improved in the hereafter. Investing in industry for twelvemonth 2008 is 130 million USD.

Banks play an of import and unreplaceable function in the economic growing in general, and in the development of private concern in peculiar. Their function sing the private concerns presently is explained in two ways:

First, private companies as yet do non hold sufficient financess for financing all of their investing demands. Second, even though direct funding ( the capital market ) can replace bank loans, many writers have provided the statement that this market might non be the plausible solution for states in passage, given that an efficient fiscal market requires stable mechanism in order to guarantee the legal protection of investors[ 5 ]. Some of the most celebrated companies are: Raiffaisen Bank, Intesa San Paolo, etc.

Investings in telecommunications are a peculiarly of import portion of the undermentioned five old ages with Grecian and Italian investors.A Investings are chiefly in Telephone Company AMC, Vodafone or CALIK ( albtelecom ) but besides companies in assorted lines of extension of the Internet.A Albania continues to stay a possible market for foreign investors as it has more possible to be developed farther.

Other Fieldss in which Albania and the authorities are interested to pull foreign investing in are touristry, excavation, energy sector, oil and gas, etc. The touristry sector is the most interesting because it has many natural resources and some topographic point with many sun yearss. Besides in the last twelvemonth with the denationalization advancement, Albania present many chances in energy sector and excavation.

Infrastructure remains one of the obstructions for the foreign investors, despite recent old ages of import roads have been built. Almost 20 per centum of the public undertakings include the building of the European corridor associating Albania with the Republic of Macedonia and Greece, and the building of the north-south main road of the state, the Adriatic-Ionian main road[ 6 ]. Some of companies are Sigal ( Uniqa Group ) / ( Acquisition ) ; Bechtel and Enka ; Airport Partners.

FDI during the old ages 2000-2008

Albania passed from a centralised economic system to a modern open-market economic system. Due to this Albania has a batch of jobs like poorness, failed establishments, a weak regulation of jurisprudence, big out-migration of jobseekers and it ‘s economic advancement is really low. Today, Albania remains one of the poorest states in the South East Europe.

Bing a Western Balkan state draw a bead oning to go portion of the European household and market, Albania is prosecuting economic development processes with the end to cut down unemployment and increase productiveness and fight in the European economic system.

During the old ages the degree of FDI in Albania is increasing. The competitory advantages of a state are peculiarly of import in the field of Direct Investment. Albania has important chances to pull Foreign Direct Investment, among them its geographic place ( ports in the Adriatic and the Ionian Seas ) ; natural resources ; an educated labour force ; and competitory wages. All of these are attractive elements to foreign investors. Consequently, our state will derive great economic benefit from FDI.

The flow of the FDI in 2007 has been increasing at the degree of 74 % comparing to 2006[ 7 ]. And an of import function at this increasing is the FDI particularly in communicating, particularly the denationalization of the Albtelecom. In 2008 the flow of FDI is 50 % more comparison to 2007, because of the foreign direct investings at energetic.

Figure 2: FDI Inflow 2000-2008, in 1000000s Euro

Beginning: Ministry of Economy, Trade and Energy ( 2009 ) & A ; ain computation

Albania comparing with part

The index of foreign direct investings ( FDI ) is of import in developing states every bit good as in developed 1s. This index indicates the development degree of a state, its degree of opening to regional and planetary markets and the international criterions it has attained. An addition in the foreign direct investing ensures societal and economic development in the hereafter, and foreign direct investing is a cardinal factor towards advancement in Albania[ 8 ]. In Albania there are many infinites to put and it is noticed because the inflow of foreign investors has increased in recent old ages. Increased foreign investing affects straight in the development of the state and particularly in the decrease of unemployment because could open new occupation topographic points that affects the growing of income. If comparing our state with other states of part as Bosnia & A ; Herzegovina, Montenegro and FYROM will look at FDI inflow arrives at a figure that ranks Albania in the 2nd topographic point. Above us is Bosnia & A ; Herzegovina, while Montenegro and FYROM are below. During the twelvemonth 2008 in Albania inflow of foreign direct investing have been higher compared to the part, they reached 682 million euro sum[ 9 ].

If we make another comparing of Albania with some topographic points of the part for the first one-fourth of 2009, we will look that Albania ranks foremost with a flow of 124 million euro. Continued with Montenegro and FYROM, while Bosnia & A ; Herzegovina is ranked last with an inflow of 30.7 million euro. As we look, Albania has made a batch of advantages in pulling foreign investors who have found more infinite to put and hold contributed to economic growing.

Figure 4: First one-fourth FDI – 2009, in 1000000s Euro

Beginning: Ministry of Economy, Trade and Energy ( 2009 )


The most preferable sectors for investors are: Light industry, Energy and excavation sector, Banking system, Telecommunication.

Due to structural and economic system reforms growing was strong in the last old ages. The flow of FDI was addition, particularly in 2007 and 2008 the flow was dual comparison to 2006.

Comparing with the other states of the part Albania has made a batch of advantages in pulling foreign investors, because in 2008 was the 2nd and in 1st one-fourth of 2009 was the first.


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