The Impact of Foreign Direct Investment on Exports: A Study of Selected Countries in the CESEE Region

Parveen Kumar, Ali Moridian, Magdalena Radulescu () and Ilinca Margarita
Additional contact information
Parveen Kumar: Department of Humanities and Social Science, National Institute of Technology Kurukshetra, Kurukshetra 136119, India
Ali Moridian: Department of Economics and Management, Urimia University, Urmia 57179-44514, Iran
Magdalena Radulescu: Department of Finance, Accounting and Economics, National University of Science and Technology Politehnica Bucharest, 060042 Bucharest, Romania
Ilinca Margarita: Institute of Doctoral and Postdoctoral Studies, University Lucian Blaga of Sibiu, 550024 Sibiu, Romania

Economies, 2025, vol. 13, issue 6, 1-25

Abstract: The evolving macroeconomic landscape, shaped by the global financial crisis and the COVID-19 pandemic, poses significant challenges for economies worldwide. However, Central, Eastern, and Southeastern European (CESEE) countries have demonstrated resilience and rapid recovery during crises, driven by a surge in consumption fueled by domestic credit and robust export growth supported by flexible exchange rates and adaptive monetary policies. Prior to EU accession, substantial foreign direct investment (FDI) during privatization and restructuring facilitated knowledge and technology transfers in CESEE economies. This study examines the interplay of exports, real exchange rates, GDP growth, FDI, inflation, domestic credit, and the human development index (HDI) in the CESEE region from 1995 to 2022, covering the transition period, EU accession, and major crises. Employing a panel ARDL model, we account for asymmetric effects of these variables on exports. The results reveal that GDP, FDI, inflation, domestic credit, and HDI significantly and positively influence exports, with HDI and GDP exerting the strongest effects, underscoring the pivotal roles of human capital and economic growth in enhancing export competitiveness. Conversely, real exchange rate depreciation negatively impacts exports, though non-price factors, such as product quality, mitigate this effect. These findings provide a robust basis for targeted policy measures to strengthen economic resilience and export performance in the CESEE region.

Keywords: FDI; real exchange rate; GDP; inflation; domestic credit; export; CESEE countries (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2025
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2227-7099/13/6/150/pdf (application/pdf)
https://www.mdpi.com/2227-7099/13/6/150/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jecomi:v:13:y:2025:i:6:p:150-:d:1665161

Access Statistics for this article

Economies is currently edited by Ms. Hongyan Zhang

More articles in Economies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().