IMPACT OF GLOBALIZATION ON FOREIGN DIRECT INVESTMENT AND GROSS DOMESTIC PRODUCT IN WESTERN BALKAN COUNTRIES

Amra Babajić, Mirnesa Baraković Nurikić and Esma Kurtagić

Ekonomske ideje i praksa, 2025, issue 58, 40-62

Abstract: Globalization represents one of the great changes leading to the creation of a global economy without the existence of any borders and obstacles. Countries strive to achieve as much economic growth as possible, so that their population and economy can function better in times of sudden and increasing changes and various instabilities. The main goal of this paper is to determine the impact of globalization on both foreign direct investment and gross domestic product in Western Balkan countries, i.e. whether the processes of increasing globalization of a country can simultaneously be beneficial for that country. Globalization was observed on the basis of the KOF Index of Globalisation, taking into account indices for the economic freedom of countries, foreign direct investment was observed by means of indicators of inflow of foreign direct investments (FDI), and gross domestic product was observed using gross domestic product per capita (GDP p.c.). The study covers the countries of the Western Balkans in the period from 2005 to 2022. The methods of descriptive statistics and correlation analysis, as well as the method of comparison, were used. The results of the study indicate that the KOF Index of Globalisation has a statistically significant and strong positive relationship with the inflow of foreign direct investments and with the gross domestic product per capita. In addition, the results show an increasing trend in the value of the KOF Index of Globalisation and in the growth of gross domestic product per capita.

Keywords: globalizacija; indeks globalizacije; strane direktne investicije; bruto domaći prizvod; Zapadni Balkan (search for similar items in EconPapers)
JEL-codes: F62 F63 O40 (search for similar items in EconPapers)
Date: 2025
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