Assessing the Impact of Foreign Direct Investment on Economic Growth: Evidence from the Western Balkans

This study aims to empirically explore the relationship between FDI and growth in six of the Western Balkan countries. The hypothesized relationship between FDI and economic growth was examined for the period between 1996 and 2021. Descriptive statistics and simple linear regression were used in data processing. The findings of this study reveal that a hypothesis about a positive impact FDI inflows on the GDP selected countries has been rejected in case of Albania and Bosnia and Herzegovina. It means that FDI has no statistically significant influence on growth in these two countries. However, when it comes to Croatia, North Macedonia, Montenegro and Serbia, a hypothesis was not rejected providing explanation that FDI contributes to growth of these four countries. FDI functions as a growth accelerator yet its success ratings differ in each situation. Government policies need to be customized for each country based on the successful Montenegro's model.