Quality of institutions, foreign direct investments and economic growth: Empirical evidence from Balkan economies

• Published in: ECONOMICUS Vol. 22; no. 1; pp. 43 - 52
• Main Authors: Topi, Kevin, Xhepa, Selami
• Format: Journal Article
• Language: English
• Published: Shtëpia botuese “UET Press” 2023; Publishing House “UET Press”
• Subjects: Corruption - Transparency - Anti-Corruption; Economic development; Economic policy; Financial Markets; International relations/trade; Foreign Direct Investment; Western Balkans; European Union; Institutions; Economic Growth
• DOI: 10.58944/suvu3944
• ISSN: 2223-6295

This paper analyzes the relationship between institutions, foreign direct investment (FDI) and economic growth in the Western Balkans region. We use a difference-indifference method to evaluate the impact of institutions on attracting FDI and promoting economic growth and we find evidence, which support that quality of institutions is an important policy variable. The research shows that institutions play a key role in determining economic growth and attracting foreign investment. This highlights the importance of creating and maintaining inclusive institutions that promote the rule of law, control of corruption, and regulatory quality, which can lead to increased economic development and investment.