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The economic impacts of the foreign direct investments: panel estimation by sectors on the case of Macedonian economy

Author

Listed:
  • Aneta Krstevska

    (Chief Economist at the National Bank of the Republic of Macedonia)

  • Magdalena Petrovska

    (Analyst at the Research Department of the National Bank of the Republic of Macedonia)

Abstract

This paper elaborates economic impacts of foreign direct investments (FDI) on the case of Macedonian economy. Most developing countries consider FDI a vital source for their development. Anyway, it is quite difficult to measure the economic effects of FDI on the host country, having in mind their numerous direct and indirect effects. Besides the amount of FDI inflows, economic benefit will also depend on their structure. Based on a panel regression technique, FDI impact on GDP, export and employment on the case of Macedonian economy have been estimated, taking into account their structural dimension. The main conclusion of the analysis is that FDI inflows were an important factor for GDP growth and export performances of the Macedonian economy. On the other hand, the FDI impact over employment is negative mainly due to the low level of green field investments and non attractiveness of the labour intensive industry for the foreign investors. These findings regarding the type and sector distribution of FDI inflows are very important for the policy makers and imply a need for a strategic approach in this field.

Suggested Citation

  • Aneta Krstevska & Magdalena Petrovska, 2012. "The economic impacts of the foreign direct investments: panel estimation by sectors on the case of Macedonian economy," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 1(2), pages 55-73.
    • Handle: RePEc:cbk:journl:v:1:y:2012:i:2:p:55-73
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    References listed on IDEAS

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    1. Marco Neuhaus, 2006. "The Impact of FDI on Economic Growth," Contributions to Economics, Springer, number 978-3-7908-1735-5, March.
    2. Anton Jevcak & Ralph Setzer & Massimo Suardi, 2010. "Determinants of Capital Flows to the New EU Member States Before and During the Financial Crisis," European Economy - Economic Papers 2008 - 2015 425, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    3. Goran Vuksic, 2005. "Impact of foreign direct investment on Croatian manufacturing exports," Financial Theory and Practice, Institute of Public Finance, vol. 29(2), pages 131-158.
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    Citations

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    Cited by:

    1. Mite Miteski & Dijana Janevska Stefanova, 2017. "The Impact of Sectorial FDI on Economic Growth in Central, Eastern and Southeastern Europe," Working Papers 2017-01, National Bank of the Republic of North Macedonia.
    2. Dimitar NIKOLOSKI, 2017. "The impact of Foreign Direct Investments on employment: the case of the Macedonian manufacturing sector," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 8, pages 147-165, December.
    3. Bekhet, Hussain Ali & Al-Smadi, Raed Walid, 2015. "Determinants of Jordanian foreign direct investment inflows: Bounds testing approach," Economic Modelling, Elsevier, vol. 46(C), pages 27-35.
    4. Viral Pandya & Sommala Sisombat, 2017. "Impacts of Foreign Direct Investment on Economic Growth: Empirical Evidence from Australian Economy," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(5), pages 121-131, May.
    5. Ngo Thai Phuong & Bahaudin G. Mujtaba & Greg Fisher, 2014. "The Influence of Communism on Ethical Decision Making," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 4(1), pages 1-8, February.
    6. Hussain Ali Bekhet & Raed Walid Al-Smadi, 2016. "The dynamic causality between FDI inflow and its determinants in Jordan," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 11(1), pages 26-47.
    7. International Monetary Fund, 2016. "Former Yugoslav Republic of Macedonia: Selected Issues," IMF Staff Country Reports 2016/357, International Monetary Fund.
    8. Derado Dražen & Horvatin Darko, 2023. "FDI and Economic Growth – Perspective of Southeast European Countries," Zagreb International Review of Economics and Business, Sciendo, vol. 26(1), pages 119-148.
    9. Cruz Mejía, Jose Vidal & Cruz-Rodríguez, Alexis, 2020. "Impacto de la inversión extranjera directa en el crecimiento económico, las exportaciones y el empleo de República Dominicana [Impact of foreign direct investment on economic growth, exports and em," MPRA Paper 100990, University Library of Munich, Germany.

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    More about this item

    Keywords

    foreign direct investments; tradable sector; non tradable sector; economic growth; export; employment;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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