Impact of Investment, Trade and Income per Capita on the Growth of the Manufacturing in Kosovo

Nakije Kida
International Journal of Economics and Business Administration, Volume VIII, Issue 1, 425-432, 2020
DOI: 10.35808/ijeba/562


Purpose: The purpose of this study is to measure the impact of Foreign Direct Investment (FGI), Domestic Investment (DI), Trade (T), and Income per Capita (GDPpc) on the Growth rate (GR) of the manufacturing sector in Kosovo. Methodology: Descriptive statistical analysis, Spearman's rho correlation analysis, multiple regression analysis, Likelihood Ratio Tests that include the Chi-Square test were used to validate the research hypothesis. The data were obtained from the World Bank covering the period 2004-2018, the data processing is done with the SPSS-21 software package. Findings: The results found a positive impact of domestic investments in the manufacturing sector. Whereas, Foreign Direct Investment has a negative impact on the manufacturing sector as a result of the low reinvestment of foreign investors in this sector. Whereas, the trade coefficient is statistically significant and negative as a result of the dominance of imports of products and services and low productivity. The per capita income ratio is statistically significant and negative because of the low level of per capita income which reduces the demand for products of the manufacturing sector by increasing the demand for cheaper imported goods. Practical implications: The results are clear imposing a strong message to policymakers to prioritize macro-fiscal policies that drive increased output, increased exports, and employment. Originality: This paper highlights an empirical analysis based on real data obtained from the World Bank Indicator for Kosovo with previously unexplained variables.

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