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INTERDEPENDENCIES BETWEEN GROSS CAPITAL FORMATION, ECONOMIC GROWTH AND EXTERNAL EQUILIBRIUM IN THE CONTEXT OF THE EUROPEAN UNION ENLARGEMENT

Florin Pavelescu ()

Romanian Journal of Economics, 2008, vol. 27, issue 2(36), 79-94

Abstract: In this paper, having in view the hypothesis that the synthetic indicator of accumulation regime is the gross capital formation/GDP ratio, an improved analysis methodology of correlation between the above-mentioned indicators is proposed. The proposed methodology is applied for the 1999-2006 periods in case of 27 countries that now are belonging to European Union. It is revealed that in most of EU member states the main factor of correlation was the investment propensity growth, in conditions of external commercial balance worsening. Also, there are identified some asymmetries between the old (EU-15) and new (NMS) member countries of the European Union. In EU-15 the gross capital formation has a more reduced weight in GDP and domestic demand in comparison with NMS. Also, the foreign commercial balance register as a rule a surplus in EU-15 and deficits in NMS. On this base, it is concluded that for Romania, like the majority of new members-states, it is very important to adopt measures favouring a high growth rate of GDP at the same time with the decrease in foreign commercial deficits.

Keywords: gross capital formation; main factor of the correlation between gross capital formation and GDP; investments propensity; absorbative economic growth (search for similar items in EconPapers)
JEL-codes: B41 C19 E22 O47 (search for similar items in EconPapers)
Date: 2008
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