EFFECT OF CORRUPTION ON FOREIGN DIRECT INVESTMENT INFLOWS IN COUNTRIES OF THE WESTERN BALKANS

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Published: Mar 25, 2023
DOI: https://doi.org/10.47305/JLIA2391131h
Keywords:
Foreign Direct Investment, Corruption, Inflation Rate, Exchange Rate, Western Balkans

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Artan Hajdini
PhD(c) at the University of Prishtina, Faculty of Economics, Kosovo
Lum Collaku
PhD(c) at the University of Prishtina, Faculty of Economics, Kosovo
https://orcid.org/0000-0001-7837-0149
Safet Merovci
University of Prishtina, Faculty of Economics, Kosovo

Abstract

The purpose of this study was to investigate the effect of corruption on Foreign Direct Investment (FDI) in the Western Balkans countries, including Bosnia and Herzegovina, Croatia, Kosovo, Montenegro, North Macedonia, Serbia, and Albania. Secondary data from The World Bank, Transparency International, and International Monetary Fund databases were utilized to complete this study for 2012-2020. The built model of multiple linear regression included four independent variables, namely: Corruption Perception Index (CPI), Western Balkan Corruption Ranking (WBCR), Exchange Rate (EXG), and Inflation Rate (INFL), as well as FDI as a dependent variable, and data effects were analyzed through the SPPS scientific research software program. The results found that if CPI and WBCR were to increase by one unit, FDI would decrease by 0.088, namely 0.624, while if EXG and INFL were to increase by one unit, FDI would increase by 0.165, namely 0.236. In order to fight corruption and potentially attract more foreign direct investment, the governments of these countries should work to harmonize their anti-corruption laws with those of the European Union. In order to prevent the negative consequences of FDI inflows, they should also maintain a balanced rate of inflation, which entails stabilizing exchange rate fluctuations. 

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How to Cite
Hajdini, Artan, Lum Collaku, and Safet Merovci. 2023. “EFFECT OF CORRUPTION ON FOREIGN DIRECT INVESTMENT INFLOWS IN COUNTRIES OF THE WESTERN BALKANS”. Journal of Liberty and International Affairs 9 (1):130-43. https://doi.org/10.47305/JLIA2391131h.
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Vol. 9 No. 1 (2023): Journal of Liberty and International Affairs
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Articles
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This work is licensed under a Creative Commons Attribution 4.0 International License.

Author Biographies

Artan Hajdini, PhD(c) at the University of Prishtina, Faculty of Economics, Kosovo

Artan Hajdini, is a PhD candidate in the Faculty of Economics of the "Hasan Prishtina", Public University-Republic of Kosovo, in the "Finance, Banking and Accounting" Department. Currently, he is engaged as an Assistant at the Public University "Kadri Zeka" in Gjilan, in some of the accounting subjects. He has approximately 15 years of experience in budget and public finance in the public sector. He is certified as an Internal Auditor of the Public Sector. He also is an active member and Certified Accountant in the Association of Certified Accountants and Auditors of Kosovo ('SCAAK'). This is the second co-authored work published in Scopus-indexed journals, and several more works are being published. His research interest is the field of Auditing, Accounting, and Finance.

Lum Collaku, PhD(c) at the University of Prishtina, Faculty of Economics, Kosovo

Lum Collaku, is a PhD candidate in the Faculty of Economics of the Public University "Hasan Prishtina"- Republic of Kosovo, in the "Finance, Banking and Accounting" Department. His work experience is mainly in the field of education and accounting. His interest is observed in the field of Finance and Macroeconomics, respectively International Finance and Public Finance. This is the second work published in co-authorship in journals indexed in Scopus, and several other works in the field of Finance and Accounting are in the process of publication.

Safet Merovci, University of Prishtina, Faculty of Economics, Kosovo

Safet Merovci is a lecturer, consultant and expert in the fields of entrepreneurship, international finance and financial markets. With a long and distinguished career spanning over three decades, he has held numerous key positions in the Government of Kosovo, the United Nations and prestigious academic institutions. Starting his professional journey in 1986, he worked as Head of Accounting and Planning Department in the Railway Organization of Kosovo. Then he moved to the academy and has been a lecturer in Entrepreneurship, Financial Markets and International Finance - University of Prishtina since 1988. Also, as a lecturer he has been part of various educational institutions such as: Private University Colleges “Iliria”, “Victory”, “Fama”, “AAB” and the State University of Tetova. Also, he has served in various functions, as Political Advisor to the Prime Minister (2002-2004), Co-Head of the Office for Energy in Kosovo (2003-2004), Deputy General Director at the Trepca Complex (1999-2002), as well as International Consultant for the UNDP Energy Mission in Pyongyang, North Korea (2004-2006). He has a large number of articles published in international journals and has written books on Finance and Entrepreneurship. Some of his notable works include: 'Financial Markets and Instruments', 'Entrepreneurship' and Financial Markets, Second Edition'. He is an active member of several professional bodies, including the Steering Committee of the University of Prishtina and the UN Office for Eastern Europe and the Western Balkans for Public Administration.