Stanisic, Nenad (2008): Do Foreign Direct Investments Increase the Economic Growth of Southeastern European Transition Economies? Published in: South-Eastern Europe Journal of Economics , Vol. 6, No. 1 (16. May 2008): pp. 29-38.
Download (436Kb) | Preview
There are two important effects of foreign direct investments (FDI) on a host economy: the effect on economic growth and the effect on export performances.
Both economic features are important for the transition economies' prospects of European Union (EU) accession. After a short review of relevant research, this paper examines the statistical relationship between FDI inflow and economic growth. Results do not reveal any positive correlation between these two variables.
Lack of correlation between FDI inflows and economic development is rather the consequence of methodological imperfections, than the real absence of positive influences of FDI. The problem arises from the fact that the observed countries are in the transition process. Due to structural reforms, there is production and employment decrease in inefficient domestic firms. This can neutralize or even outweigh the positive effect of FDI on economic growth of host sectors.
|Item Type:||MPRA Paper|
|Original Title:||Do Foreign Direct Investments Increase the Economic Growth of Southeastern European Transition Economies?|
|Keywords:||Foreign Direct Investments; Economic Growth; Transition Economies; Southeast Europe|
|Subjects:||C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C10 - General
F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment; Long-Term Capital Movements
O - Economic Development, Technological Change, and Growth > O5 - Economywide Country Studies > O52 - Europe
|Depositing User:||NENAD STANISIC|
|Date Deposited:||27. May 2008 13:34|
|Last Modified:||12. Feb 2013 18:08|
Appleyard, D. and Field, A. Jr., 2003, International Economics, Irwin/McGraw-Hill, Boston. Aturupane, C., Djankov, S. and Hoekman, B., 1997, Determinants of Intra-industry Trade between East and West Europe, Working paper, World Bank, Washington. Blomstrom, M., R.E. Lipsey, and M. Zejan, 1994, What Explains Developing Country Growth?, NBER Working paper No. 4132. Borenzstein, E., J. De Gregorio, and J.W. Lee, 1995, How Does Foreign Direct Investment Affect Economic Growth?, NBER Working paper No. 5057. Bosworth, B. and S. Collins, 1999, Capital Inflows, Investment, and Growth, Tokyo Club Papers, Vol. 12, pp. 55-72. Campos, N. F. and Kinoshita, Y., 2002, Foreign Direct Investment as Technology Transferred: Some panel Evidence from the Transition Economies, Centre for Economic Policy Research, Discussion paper no.3417. De Mello, L.R., 1996, Foreign Direct Investment, International Knowledge Transfers, and Endogenous Growth: Time Series Evidence, Mimeo, Department of Economics, University of Kent. Dees, S., 1998, Foreign Direct Investment in China: Determinants and Effects, Economics of planning, Vol. 31, pp. 175-194. Djankov, S. and Hoekman, B., 1998, Foreign Investment and Productivity Growth in Czech enterprises, World Bank Economic Review, Washington. Global Development Finance, World Bank, Washington, also available on www.worldbank.org. Kaminski, B., 2000, How Accession to the European Union has Affected External Trade and Foreign Direct Investment in Central European Economies, Working paper, World Bank, Washington. Kovacevic, R., 2001, Tranzicija i spoljnotrgovinska politika, Institut za spoljnu trgovinu, Beograd. Kovacevic, R., 2004, Savremene tendencije u svetskoj privredi, autorsko izdanje, Beograd. Lyroudi, K., Papanastasiou, J. and Vamuakidis, A., 2004, Foreign Direct Investment and Economic Growth in Transition economies, SEEJE, Vol. 2, No. 1, ASECU, pp 97-110. Petrakos, G., 2003, Peripheral European Transitions: performance, structure and trade relations in the Balkan region, SEEJE, Vol. 1, No 1, ASECU, pp 41-64. Rodrik, D., 1999, The New Global Economy and Developing Countries: Making Opennes Work, Policy Essay No. 24, Overseas Development Council, Washington D.C. United Nations, Secretariat of the Economic commission for Europe, 2001, Economic Growth and Foreign Direct Investment in the Transition Economies, Chapter 5 in Economic Survey of Europe 2001, Geneva and New York.