Human resource as a determinant of Foreign Direct Investments (FDI)

Abstract

Foreign direct investments (FDI) have a great importance both in transition and in economic development.  The 
collapse of communism in Albania and the emergence of a market economy have led to a large inflow of foreign 
direct investment (FDI) since the mid 90’s. The FDI usually goes to the countries where it is possible to combine 
the ownership advantages with the location-specific advantages of the host countries through internationalization 
advantages of foreign investments 
The inflows of FDI to less developed countries are associated with vertical investments; this one takes place 
when a firm relocates only a part of its production process but not the whole production. Foreign investors are 
motivated when they find different factors of production, like natural resources, inexpensive labor, infrastructure 
and specific skills. 
But, an important determinant of foreign direct investments is the human capital, too. In this paper, we are 
focused on this determinant and in the ways that led to a skilled work force. The hypothesis is that a cheap and 
abundant labor force is not the only determinant to attract foreign direct investments to a country.