IMPACT OF CORPORATE INCOME TAX AND NON-TAX VARIABLES ON FOREIGN DIRECT INVESTMENT The Republic of Albania
Research Article
IMPACT OF CORPORATE INCOME TAX AND NON-TAX VARIABLES ON FOREIGN DIRECT INVESTMENT The Republic of Albania
ABSTRACT
The effects of corporate income tax and non-tax variables on foreign direct investment (FDI) in Albania for the period from 1992 to 2020 are addressed in this study. For the aim of this study, non-tax variables are inflation rate and Foreign trade. Secondary data were sourced from the Albanian Ministry of Finance and Economy, a database of Albanian Bank and World Bank Development indicators. As was expected between corporate income tax and foreign direct investment, based on the results of the ARDL model exists a significant and negative relationship in long term. Moreover, the relationship between Inflation, trade, and FDI as independent variables results to be positive and insignificant in long term, not like was expected. Fstatistic (12.298) value, greater than upper bound critical values of I(0) and I(1) confirm the presence of cointegration and allows in this way (ECM) model for analyzing data. The effect of the dependent variables of this study explains 96.62 percent of the changes in FDI, this refers to the coefficient of determination (R2). Every year, 238% of short-term changes in FDI are corrected referred to as adjustment speed. A longterm stable relationship can be achieved based on the error correction term (ECM) which is significant at 1% and negative. Like on long run results based Error Correction Model, there is a negative and significant long-run relationship between corporate income tax and foreign direct investment was expected. On the other hand, the long-run relationship between Inflation, trade, and FDI as independent variables results be positive and insignificant, not like was expected. Diagnostic tests have proved that the model does not suffer from autocorrelation or heteroskedasticity and is well-specified.
BEJAJ, A.,
(2022). IMPACT OF CORPORATE INCOME TAX AND NON-TAX VARIABLES ON FOREIGN DIRECT INVESTMENT The Republic of Albania. Trends in Economics, Finance, and Management Journal, 4(2), 89-104. Arrival Date Posted By:https://tefmj.ibupress.com/articles/impact-of-corporate-income-tax-and-non-tax-variables-on-foreign-direct-investment-the-republic-of-albania
