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Interdependencies Between Gross Capital Formation, Economic Growth And External Equilibrium In The Context Of The European Union Enlargement

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  • Florin-Marius PAVELESCU

    ()
    (Institute of National Economy)

Abstract

In this paper, having in view the hypothesis that the synthetic indicator of accumulation regime is the gross capital formation/GDP ratio, an improved analysis methodology of correlation between the above-mentioned indicators is proposed. The proposed methodology is applied for the 1999-2006 periods in case of 27 countries that now are belonging to European Union. It is revealed that in most of EU member states the main factor of correlation was the investment propensity growth, in conditions of external commercial balance worsening. Also, there are identified some asymmetries between the old (EU-15) and new (NMS) member countries of the European Union. In EU-15 the gross capital formation has a more reduced weight in GDP and domestic demand in comparison with NMS. Also, the foreign commercial balance register as a rule a surplus in EU-15 and deficits in NMS. On this base, it is concluded that for Romania, like the majority of new members-states, it is very important to adopt measures favouring a high growth rate of GDP at the same time with the decrease in foreign commercial deficits.

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Bibliographic Info

Article provided by Institute of National Economy in its journal Romanian Journal of Economics.

Volume (Year): 27 (2008(XVIII))
Issue (Month): 2(36) (December)
Pages: 79-94

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Handle: RePEc:ine:journl:v:2:y:2008:i:36:p:79-94

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Related research

Keywords: gross capital formation; main factor of the correlation between gross capital formation and GDP; investments propensity; absorbative economic growth;

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References

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  1. Madsen, Jakob B., 2002. "The causality between investment and economic growth," Economics Letters, Elsevier, vol. 74(2), pages 157-163, January.
  2. Florin-Marius PAVELESCU, 2008. "Gross Capital Formation And Economic Growth During Early 2000’S In Eu-Member And Candidates States," Romanian Journal of Economics, Institute of National Economy, vol. 26(1(35)), pages 166-179, June.
  3. Engelbert Stockhammer, 2007. "Some Stylized Facts on the Finance-Dominated Accumulation Regime," Working Papers wp142, Political Economy Research Institute, University of Massachusetts at Amherst.
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Cited by:
  1. Pavelescu, Marius Florin, 2013. "Dynamics of Fixed Capital Productivity and the Macroeconomic Equilibrium," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 145-158, June.

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