The Impact of Foreign Direct Investments on Economic Growth in Transition Economies: Dynamic Panel Data Analysis

Mustafa Ozcag, E. Yasemin Bozdaglioglu and Hatice Kucukkaya
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Mustafa Ozcag: Aydin Adnan Menderes University
E. Yasemin Bozdaglioglu: Aydin Adnan Menderes University
Hatice Kucukkaya: Aydin Adnan Menderes University

Business and Economics Research Journal, 2019, vol. 10, issue 1, 41-53

Abstract: In the transition economies, together with the transition process, positive developments in economic growth performances can be seen. In this study, the impact of foreign direct investment on the economic growth rates of 27 transition economies for the period 1997-2016 is modeled within the theories of neoclassical and endogenous growth. In order to investigate this effect in the framework of Neoclassical and endogenous growth theories, the human capital factor also plays an important role. For this reason, the relationship between foreign direct investment and economic growth for the specified period is tested with the estimators Arellano-Bond, Arellano-Bondmax and Arellano-Bond 2 Stage GMM (Generalized Method of Moments) which are current dynamic panel model estimators. Economic growth, human capital and trade volume variables are statistically significant and the coefficients are positive. The most striking result of working is; if foreign direct investment is supported by human capital growth, it will have much more impact on economic growth.

Keywords: Economic Growth; Transition Economies; Foreign Direct Investment; Dynamic Panel Data Analysis (search for similar items in EconPapers)
JEL-codes: C23 F21 O47 P20 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:ris:buecrj:0376

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