FDI INFLOWS IN TIME OF CRISIS - PANEL DATA ANALYSIS OF FDI INFLOWS TO THE SELECTED EU MEMBER STATES

Ozren Pilipovic, Meta Ahtik and Nenad Rancic
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Ozren Pilipovic: Assisant Professor, department of Economics Faculty of Law, Zagreb
Nenad Rancic: Assisant Professor department of Economics Faculty of Law, Zagreb

Interdisciplinary Management Research, 2015, vol. 11, 433-466

Abstract: The purpose of his article is to examine the relationship between FDI and national economic policy in the time of crisis. We will test this subject on the following EU member states: Portugal, Italy, Ireland, Greece, Spain, Baltic and CEE countries, Romania, Bulgaria and Croatia. They make the European Union periphery (with the exception of Italy) and all of them with the exception of Italy (and Slovenia up to 2008) rely heavily on FDI attraction in order to foster economic growth. We assume the existence of certain differences between these groups of countries, which are caused by the possibility to accommodate the effects of international financial crisis through autonomously run monetary and fiscal policy. In order to test this empirically we used panel data econometric analysis. Analysis has shown that with adequate economic policy, and membership in larger regional economic integrations, it is possible to ease negative influences of financial crisis and increase share of FDI in GDP. GDP growth rate (which in our model stood as a proxy for market demand) is also one of the essential ingredients of FDI attraction. On the other hand, economic crisis (manifested as negative GDP growth rate) negatively influences FDI attraction.

Keywords: FDI; economic crisis; economic policy; PIIGS; Baltic States; CEE Countries; Panel data analysis (search for similar items in EconPapers)
JEL-codes: C8 H12 O52 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (1)

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