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Fdi- Exports-Gdp Nexus In The Republic Of Moldova

Author

Listed:
  • Zinovia TOACA

    (Academy of Economic Study of Moldova, Republic of Moldova)

  • Victoria FALA

    (National Institute of Economic Research, Republic of Moldova)

Abstract

Exports and FDI are important tools of Governments to stimulate economic growth and prosperity. Many countries implemented successfully export led-grow models in their development path. Being a small European transition economy affected by mass migration, Moldova is trying to change its consumption led growth model fueled by remittances by an investment and export growth led model, were FDI have to be an important driver. Though, FDI inflows in Moldova are small comparative to many European countries, the economic growth is slowing down on long term, while there is slight improvement in export competitiveness. The aim of this paper was to analyze the long term causality between FDI, GDP and exports of goods in the Republic of Moldova. Estimations were performed based on the available data for the period 1995-2021. The Granger causality approach has been applied to test the relationship between the 3 variables based on annual data. The authors found a unidirectional causality relationship running from FDI to GDP, FDI to exports, and a Granger causality from GDP to merchandise exports. An impulse-response analysis has been performed based on VECM models. A 1% growth in FDI in Republic of Moldova causes an increase of GDP by 0.09 p.p. and of exports of goods by 0.08%.

Suggested Citation

  • Zinovia TOACA & Victoria FALA, 2022. "Fdi- Exports-Gdp Nexus In The Republic Of Moldova," Contemporary Economy Journal, Constantin Brancoveanu University, vol. 7(4), pages 193-204.
    • Handle: RePEc:brc:brccej:v:7:y:2022:i:4:p:193-204
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    exports; foreign direct investments; economic growth; Granger causality; VECM model; transition economy;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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