THE ROLE OF LOCAL GOVERNMENT TO INCREASE FLOWS OF FOREIGN DIRECT INVESTMENT IN SHKODRA REGION

Abstract

The successful FDI performance of CEE countries during their preparation for the EU accession in the last years shows that FDI inflows 
can have a very positive impact on the economic development of a country. Although FDI in Albania have increased over the last few 
years, it still remains among the lowest in the region of Western Balkans with a large part of FDI inflows coming from large state 
enterprises privatizations. In order to increase FDI inflows, the Government of Albania has intensified its efforts to implement a number of 
fiscal and legislative reforms to improve the business climate in Albania. In order to attract FDI, the Albanian Government has developed a 
range of incentives for foreign investors in Albania, such as the “One stop shop for granting licenses”, tourism and energy sector 
incentives as the most interesting sectors for investment actually in Albania. The signing of the Stabilization and Association Agreement 
with the EU in June 2006, Albania’s transition into a NATO country and the prospective European Union (EU) membership are considered 
as important factors contributing to the increased FDI inflows even during the financial crisis period. During the last two years, Albania 
experienced an increase in foreign investors’ interest in a wide range of sectors, with energy generation, telecommunication, cement 
production, mining, oil and industrial parks heading the list. However, the major obstacle factors for FDI inflows seem to remain the same: 
pervasive corruption, weak law enforcement, poor rule of law, lack of developed infrastructure, lack of a reliable energy supply and 
insufficiently defined property rights. This paper analyses FDI inflows in the region of Shkodra focusing on the actual situation of FDI 
inflows and the oppportunities that this region offers to attract new foreign investments as a way to increase employment, bring new 
tecnologies and effect the further economic development of this region.The paper is going to analyze the role of local government 
incentives in attracting FDI in Shkodra.