 FDI and economic growth in Central and Eastern Europe: Is there a link?Katarina Bačić, Domagoj Račić and Amina Ahec Šonje MPRA Paper from University Library of Munich, Germany Abstract: Economic literature on economic growth and FDI (foreign direct investment) implies that FDI can facilitate growth of recipient economy via capital inflow instantly and via positive spillovers and inclusion into international productive and innovative networks ex post. In this paper the role of FDI is examined by using bi-variate Granger causality test for growth, merchandise exports and imports, and by modeling growth equation with FDI as one of the explanatory variables in pool regression for 11 transition economies in CEE. The final results of the quantitative analysis imply that FDI cannot account for higher growth of the observed economies. FDI appears insignificant for growth. The finding can be explained by the fact that FDI have not contributed to the capital formation strongly because they have dominantly flown in as brownfield investments into services. Market-orientation of FDI coupled with the use of home country suppliers’ or parent company’s goods and services might have helped to annul the positive effects of FDI. Keywords: Foreign direct investment; economic growth; Central and Eastern Europe; spillover; competitive effect; enterprise restructuring; industrial networks; absorptive capacity (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:83136 Access Statistics for this paper More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.