A Mechanistic Framework for Foreign Direct Investment in the case of Albania

Abstract: The aim of this thesis is to investigate if it is possible to predict the outcome of the execution of an FDI initiative in Albania through the use of a mechanistic framework which has been developed as part of this research project. Presented here is a new framework to understand the success or failure of foreign direct investment by investigating the micro-level mechanisms that are common to all FDI ventures. Since an essential component of this framework is the target country where FDI is being pursued, it is imperative that the framework be discussed using a particular country as a case and for the purpose of this work, Albania has been chosen. Most fundamental theories of FDI are macroeconomic in nature and attempt to explain why FDI happens and to what extent it may be expected but none of these theories deals with the matter at a micro-level. As a result even when predictions of a certain level of FDI are made, the reality in terms of achievement is usually very different. The proposed framework identifies the process of FDI in a country, hereafter referred to as HOST, of necessity, to go through an interaction of 3 principal players – the Government (GOVT), the trans-national company acting as a foreign direct investor (TNC) and the Investment Promotion Intermediaries (IPI). FDI is truly facilitated by the interaction of these 3 players through binary interactions, namely GOVT