Impact of Investment Environment on Foreign Direct Investment (FDI): Case of the Republic of Kosovo

The main objective of this paper is to investigate the impact of the investment environment on Foreign Direct Investment (FDI) in the Republic of Kosovo, by employing IV-GMM times series estimator, where Control of Corruption and Political Stability, Absence of Violence/Terrorism and Distance to frontier score (Doing Business) are used as main variables, while as pull factors are used GDP per capita, unemployment rate and profit tax rate.Further, The empirical findings reveal that Control of Corruption and Political Stability and Absence of Violence/Terrorism have positive and significant effect on attracting FDI flows, while Distance to frontier score (Doing Business) has shown negative effect on FDI flows in the case of Republic of Kosovo for the time period 2009q1 -2016q4.Furthermore, This paper for the first time tries to address the Kosovo case, using the IV-GMM estimator method and handling the above mentioned variables over this time period, presenting a unique case with regard to the Republic of Kosovo because, from our best knowledge, has not been addressed before such nexus for the case of Kosovo.In addition, This paper will also contribute to the existing literature rather than solving the existing debate among scholars, by using these measures to investigate their impact on attracting FDI in a transition country such as the Republic of Kosovo. Keywords: FDI, investment environment, IV-GMM, time series, transition. DOI: 10.7176/RJFA/10-10-07 Publication date:May 31st 201

Empirical Approach of the Nexus between Public Expenditures and Economic Growth: Case of Republic of Kosovo

The main objective of this paper is to investigate the impact of public expenditures on economic growth in the case of Republic of Kosovo, by addressing its significant nexus for the last decade and such results for further recommendation for future fiscal policies. Further, the paper analysis whether public expenditures have positive impact on economic growth in Republic of Kosovo, by investigating the impact of the types of public expenditures on growth. In addition, for determining the stationarity of the time series 2006m1 – 2016m9, Augmented Dickey Fuller test was employed, while VAR model was used to determine the long-run relationship between types of public expenditures and economic growth in Kosovo. The results of the empirical analysis reveal that the data are stationary in their level, while VAR results suggest positive and significant effects of transfers on real GDP, based on the positive coefficient and significance value p = 0.009, while negative and significant effects from municipal expenditures, based on the value of p = 0.066 in this model. Further, expenditures on wages, capital and subsidies have a positive but no significant effect on growth, while expenditures for goods have negative but no significant effect on economic growth in the case of the Republic of Kosovo. Finally, the paper can present a contribution on the existing literature regarding the nexus between public expenditures and economic growth, and for improvement of efficiency utilization of public expenditures in regarding their productivity. Key words: growth, fiscal policy, unit root, VAR

Empirical Analysis of the Impact of Education on Economic Growth

Education is a crucial factor for sustainable economic growth. Therefore, public expenditures on education are of great interest to both researchers and policy makers. The channels through which education affects economic growth differ according to the level of development of the country. This study aims to measure the impact of public expenditure on education for economic growth in North Macedonia. The data used are secondary data derived from the World Bank Indicators for the period 1917–2020. The econometric model employed in this study is an Instrumental Variable Two-Stage Least Square. The dependent variable in the model is Gross Domestic Product and the independent variables in the model are public expenditures on education, labor force participation rate, gross capital formation, unemployment, industry, wages, employment, information, and communication technology, and the instrumented variable is tertiary enrolment. This study suggests that a one-point increase in public expenditures on education will positively affect economic growth in the North Macedonia. The study also shows that a one-point increase in unemployment will increase economic growth and a one-point decrease in employment will increase economic growth in North Macedonia. These two results, which contradict the theoretical and empirical approaches, prove the mismatch between the supply and demand of real occupations in the labor market in North Macedonia