A Novel Integrated PCA-DEA-IMF SWARA-CRADIS Model for Evaluating the Impact of FDI on the Sustainability of the Economic System

Vitomir Starčević, Vesna Petrović, Ivan Mirović, Ljiljana Ž. Tanasić, Željko Stević () and Jadranka Đurović Todorović
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Vitomir Starčević: Faculty of Business Economics, University of East Sarajevo, Semberskih Ratara bb, 76300 Bijeljina, Bosnia and Herzegovina
Vesna Petrović: Faculty of Business Economics, University of East Sarajevo, Semberskih Ratara bb, 76300 Bijeljina, Bosnia and Herzegovina
Ivan Mirović: Faculty of Business Economics, University of East Sarajevo, Semberskih Ratara bb, 76300 Bijeljina, Bosnia and Herzegovina
Ljiljana Ž. Tanasić: Faculty of Economics—Brčko, University of East Sarajevo, Studentska 11, 76100 Brčko, Bosnia and Herzegovina
Željko Stević: Faculty of Transport and Traffic Engineering, University of East Sarajevo, Vojvode Mišića 52, 74000 Doboj, Bosnia and Herzegovina
Jadranka Đurović Todorović: Faculty of Economics, University of Niš, Trg Kralja Aleksandra Ujedinitelja, 18000 Niš, Serbia

Sustainability, 2022, vol. 14, issue 20, 1-20

Abstract: Today’s economic systems are, on the one hand, exposed to various risks and uncertainties with their trends changing almost daily, while on the other hand, they represent an extremely complex system with a large number of sustainable influential parameters. The challenge is to model macroeconomic parameters and achieve sustainability, yet also satisfy conflict situations with an increased level of uncertainty. The aim of this paper is to create an appropriate functional model by examining the mutual influence of various macroeconomic factors. It assesses a total of four scenarios considering mutual influences of: FDI (foreign direct investments), GDP (gross domestic product), imports, exports, inflation rate, RER (real exchange rate) and employment rate as defined parameters. First, the DEA (Data envelopment analysis) model was applied to determine the initial efficiency of two countries, Bosnia and Herzegovina (BIH) and Serbia, for the period 2005–2020. Then, PCA (Principal Component Analysis) was applied in combination with DEA to obtain more precise values. In addition, IMF SWARA (Improved Fuzzy Stepwise Weight Assessment Ratio Analysis) was applied to define weight coefficients of macro-economic parameters. Finally, the CRADIS (compromise ranking of alternatives from distance to ideal solution) model was applied for the final ranking of part of decision-making units. This developed, integrated model can be classified as a mathematical method for economic analysis and gives extended opportunities for solving different problems. The results show that 2009, 2013 and 2016 were the most favorable years in terms of the conditions set when it comes to Bosnia and Herzegovina, and 2012, 2014 and 2016 when it comes to Serbia. These years have been singled out and can be a benchmark for further handling and modeling of macroeconomic elements. In addition, correlation was tested using statistical coefficients.

Keywords: foreign direct investments; GDP; inflation; PCA-DEA; IMF SWARA; CRADIS (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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