Impact of foreign direct investment (FDI) on domestic investment in Republic of Croatia

Igor Ivanović

MPRA Paper from University Library of Munich, Germany

Abstract: The aim of this paper is to investigate how foreign direct investment (FDI) affects domestic investment in the Republic of Croatia. More precisely, the general purpose of this study is to determine the impact of net inflow of foreign capital on domestic investment in order to gain a clearer picture about the sensitivity and efficiency of domestic investment. After parsing domestic investment and FDI in Croatia, according to Croatian Bureau of Statistics and the Croatian National Bank, a historical overview of their movement from 1995 to 2014 was analyzed. In the following an overview and comparison of studies from around the world which deal with similar topic was made. In the empirical part; domestic gross fixed capital formation, changes in domestic stocks, net FDI and GDP growth rate was used as variables. Quarterly time series data ranging from the Q1 2001 to Q4 2014 were processed with the subset VAR (vector autoregressive) econometric model. The results shows that FDI have negative influence on domestic investment in the Republic of Croatia with time lag.

Keywords: foreign direct investment; gross investment; crowding out/in effect; subset VAR; investment efficiency (search for similar items in EconPapers)
JEL-codes: F21 (search for similar items in EconPapers)
Date: 2015-11-25
New Economics Papers: this item is included in nep-int and nep-tra
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Citations: View citations in EconPapers (3)

Published in Review of Innovation and Competitiveness - A Journal Of Economic and Social Research 1.1(2015): pp. 137-160

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:70076

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