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Does the gross fixed capital formation represent a factor for supporting the economic growth?

Gibescu, Octavia (2010): Does the gross fixed capital formation represent a factor for supporting the economic growth?

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Abstract

The present study aims to show an analysis of relationship between gross fixed capital formation and economic growth in Romania, Bulgaria, Czech Republic, Poland and Hungary for the period 2003-2009. For this, the statistical connection analysis method is applied. The used variables are: the economic growth (gross domestic product - GDP) – considered dependent variable and the gross fixed capital formation (GFCF) – considered independent variable. This workpaper uses the quarterly of GDP and GFCF, considering the period from the last quarter of 2003 until the last quarter of 2009. That analysis indicates the relation between those two indicators separately for each country in order to draw a conclusion regarding the role of GFCF to the growth and development of the Central and Eastern Europe (CEE) countries and as well as its contribution to the formation of GDP. Using this data, we apply the correlation analysis to verify the existence of the connection between two macroeconomic indicators. The obtained results show a direct and strong connection between economic growth and gross fixed capital formation, relation which is expressed by correlation coefficient with a level very close to the value of 1 for Romania, Bulgaria, Czech Republic and Poland. The conclusion is that the level of the between gross fixed capital formation may influence in the positive way the economic growth, in Romania, Bulgaria, Czech Republic and Poland.

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