This research investigates the qualitative effects of foreign direct investments of the clothing industry in a developing country like Albania. The clothing industry is often regarded as the first step of industrialization and as an employment generator for developing countries. With reference to industrialization induced by foreign direct investrnent of the clothing industry in a developing country like Albania, this research looks into whether clothing manufacturing enterprises have broken the FDI trap. The framework includes: (i) knowledge transferred in the hostterritory and (ii) the evolution in the quality of the degree of clothing manufacturing enterprises. This research is based on case study methodologyin which four clothing manufacturing enterprises two ltalian, one German, and one Greek are analyzed based on the proposed framework.The evolution offoreign clothing manufacturing enterprises in Albania, is examined through a variety ofreal contrasted data sources and by overcoming limitations of existing research in the field. Based on the results derived from implementing a case study methodology, conclusions are drawn on the qualitative effects ofFDI and the industrialization Albania has obtained in the last twenty years from the production activity of the four foreign clothing manufacturing enterprises (subsidiaries). With reference to conclusions, policy recom mendations are proposed on enhancing in a host territory a virtuous FDI circle that leads to upgranding at the firm and industry level applicable in developing countries.
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