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Verification of the Relationship between FDI and GDP in Poland

Aneta Kosztowniak ()
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Aneta Kosztowniak: Faculty of Economics and Legal, Department of Economic Policy and Banking, Kazimierz Pulaski University of Technology and Humanities in Radom, Poland

Acta Oeconomica, 2016, vol. 66, issue 2, 307-332

Abstract: The paper analyses the impact of the factors of production on economic growth in Poland in the years 1992–2012, with particular focus on the impact of foreign direct investment (FDI), and strives to verify whether a causality relationship occurred between GDP and FDI, i.e. whether high GDP dynamics attracted FDI inflows and whether this investment contributed to GDP growth. The Vector Error Correction Method impulse responses and variance decomposition analysis confirmed the bi-directional relationships between FDI and GDP in Poland. However, the impact of GDP on attracting FDI inflows to Poland is stronger than that of FDI on GDP growth. Polish developmental policy should concentrate on three essential determinants (pillars) of growth, namely employment growth, attracting FDI (with emphasis on improvement in the type of inflowing investment), and increasing the value and productivity of domestic investment.

Keywords: FDI; GDP; Poland; bilateral causality; VECM; the response function; variance decomposition (search for similar items in EconPapers)
JEL-codes: C50 C52 F41 F43 O11 (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:aka:aoecon:v:66:y:2016:i:2:p:307-332