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Impact of foreign direct investment and international tourism on long-run economic growth of Estonia

Author

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  • Amin Sokhanvar
  • Glenn P. Jenkins

Abstract

Purpose - International tourism and FDI inflows have generated detectable beneficial impacts on the economy of Estonia in the last decades. However, recently, poor international market conditions mostly caused by the trade war and COVID-19 pandemic have been a potential threat to these two factors. Besides, the poor performance of investments in recent years is behind the stagnation of productivity in Estonia. This study examines the dynamics of the effects of these factors on the rate of economic growth in Estonia and provides policy implications in line with sustained recovery. Design/methodology/approach - A nonlinear ARDL technique is employed in this study to investigate the long-run effects of FDI and the degree of tourism specialization on economic growth rate. Findings - Our findings indicate that the economic growth rate of Estonia in the long run has been positively affected by both the rate of FDI inflows and international tourism. Originality/value - This is the first study that employs a non-linear approach to investigate the dynamics of long-run effects of FDI and tourism specialization on the rate of economic growth in Estonia and provides policy implications in line with optimal growth strategy considering the economic structure, the current level of productivity and available potentials in this economy.

Suggested Citation

  • Amin Sokhanvar & Glenn P. Jenkins, 2021. "Impact of foreign direct investment and international tourism on long-run economic growth of Estonia," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 49(2), pages 364-378, March.
  • Handle: RePEc:eme:jespps:jes-11-2020-0543
    DOI: 10.1108/JES-11-2020-0543
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    Citations

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    Cited by:

    1. Muhammad Amin Hasan & Mr. Abdullah & Muhammad Arsalan Hashmi & Ali Sajid, 2022. "International Remittances and International Tourism Development in South Asia: The Moderating Role of Political Stability," Journal of Economic Impact, Science Impact Publishers, vol. 4(3), pages 177-187.
    2. Uktam Umurzakov & Shakhnoza Tosheva & Raufhon Salahodjaev, 2023. "Tourism and Sustainable Economic Development: Evidence from Belt and Road Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(1), pages 503-516, March.

    More about this item

    Keywords

    International tourism; FDI; Rate of return on investment; Productivity; Economic growth rate; Estonia; E22; E27; O11; O49; Z32;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O49 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Other
    • Z32 - Other Special Topics - - Tourism Economics - - - Tourism and Development

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