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Foreign Direct Investment and Growth Relationship in Georgia

  • Faruk Gürsoy

    (International Black Sea University, Tbilisi, Georgia.)

  • Hüseyin Kalyoncu

    (Melikþah University, Kayseri, Turkey.)

This paper aims to investigate the empirically the impact of FDI on economic growth of Georgia over the period of 1997-2010. The Engle-Granger cointegration and Granger causality tests are used in order to analyse the causal relationship between FDI and economic growth. It is crucial to see the directions of causality between two variables for the policy makers to encourage private sectors. It is found that these two variables are cointegrated. Our empirical findings suggest that it is FDI that causes GDP in the case of Georgia.

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Article provided by Econjournals in its journal International Journal of Economics and Financial Issues.

Volume (Year): 2 (2012)
Issue (Month): 3 ()
Pages: 267-271

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Handle: RePEc:eco:journ1:2012-03-4
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  1. John K. Mullen & Martin Williams, 2005. "Foreign Direct Investment and Regional Economic Performance," Kyklos, Wiley Blackwell, vol. 58(2), pages 265-282, 04.
  2. Luiz de Mello, 1997. "Foreign direct investment in developing countries and growth: A selective survey," Journal of Development Studies, Taylor & Francis Journals, vol. 34(1), pages 1-34.
  3. Ozturk, Ilhan & Kalyoncu, Huseyin, 2007. "Foreign Direct Investment and Growth: An Empiricial Investigation Based on Cross-Country Comparison," MPRA Paper 9636, University Library of Munich, Germany.
  4. Ozturk, I., 2007. "Foreign Direct Investment – Growht Nexus: A Review of The Recent Literature," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 4(2), pages 79-98.
  5. Eduardo Borensztein & Jose De Gregorio & Jong-Wha Lee, 1995. "How Does Foreign Direct Investment Affect Economic Growth?," NBER Working Papers 5057, National Bureau of Economic Research, Inc.
  6. Alfaro, Laura & Chanda, Areendam & Kalemli-Ozcan, Sebnem & Sayek, Selin, 2004. "FDI and economic growth: the role of local financial markets," Journal of International Economics, Elsevier, vol. 64(1), pages 89-112, October.
  7. Henrik Hansen & John Rand, 2004. "On the Causal Links between FDI and Growth in Developing Countries," Discussion Papers 04-30, University of Copenhagen. Department of Economics.
  8. Dierk Herzer & Stephan Klasen & Felicitas Nowak-Lehmann D., 2006. "In search of FDI-led growth in developing countries," Ibero America Institute for Econ. Research (IAI) Discussion Papers 150, Ibero-America Institute for Economic Research.
  9. Chowdhury, Abdur R. & Mavrotas, George, 2005. "FDI and Growth: A Causal Relationship," Working Paper Series RP2005/25, World Institute for Development Economic Research (UNU-WIDER).
  10. de Mello, Luiz R, Jr, 1999. "Foreign Direct Investment-Led Growth: Evidence from Time Series and Panel Data," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 133-51, January.
  11. Granger, C. W. J., 1988. "Some recent development in a concept of causality," Journal of Econometrics, Elsevier, vol. 39(1-2), pages 199-211.
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