Entela Kaleshi; Madhup Kumar Singh Solanki , pp. 81. MAM/Sektionen för Management, 2010.
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 GOVTIPI, IPITNC and TNCGOVT. Tight coupling in these pairs will promote success in FDI and loose coupling will act as a hindrance. The extent of coupling is measured through primary data collected from members belonging to the sets of GOVT, IPI and TNC.
The issues or factors in relation to which the extent of the above mentioned binary couplings are estimated are determined based on an analysis of the HOST, the country of Albania, in light of the process flows that have to be endured in order to achieve a successful FDI.
This study is not only a framework that can be used to understand the dynamics of FDI at a micro-level, but also to troubleshoot an ill-functioning foreign investment initiative. It also holds a great promise in comparing different countries using a common framework, especially if the TNC and IPI sets are identical.
This framework is referred to as the 3 Player framework in this thesis and is the only original contribution proposed here. All other frameworks presented in this work are largely used as vantage points to map some of their aspects of interest to the 3 Player framework.