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Impact Of Foreign Direct Investment On The Economic Growth Of The New Member States From Central And Eastern Europe

Author

Listed:
  • Ivan Todorov

    (Faculty of Economics, South-West Univeristy "Neofit Rilski")

  • Tsvetomir Tsvetkov

    (Faculty of Philosophy, Sofia University "St. Kliment Ohridski")

  • Sofiya Mirchova

    (Faculty of Economics, South-West Univeristy "Neofit Rilski")

  • Kalina Durova

    (Faculty of Economics, South-West Univeristy "Neofit Rilski")

Abstract

The goal of this paper is to study the effects of foreign direct investment (FDI) on the economic growth of ten new member states (NMS) from Central and Eastern Europe (CEE), which joined the European Union (EU) in 2004 and 2007 – the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia, Bulgaria and Romania. Croatia is excluded from the analysis since it became a EU member relatively late - in 2013. A vector autoregression (VAR) of annual data for the period 2007-2019 is employed. The empirical results indicate that FDI does not affect the real GDP growth rate of the NMS from CEE. The research results also show that FDI Granger-causes the economic growth of the NMS from CEE neither in the short run nor in the long term.

Suggested Citation

  • Ivan Todorov & Tsvetomir Tsvetkov & Sofiya Mirchova & Kalina Durova, 2022. "Impact Of Foreign Direct Investment On The Economic Growth Of The New Member States From Central And Eastern Europe," Ekonomski pregled, Hrvatsko društvo ekonomista (Croatian Society of Economists), vol. 73(6), pages 847-880.
    • Handle: RePEc:hde:epregl:v:73:y:2022:i:6:p:847-880
    DOI: 10.32910/ep.73.6.2
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    More about this item

    Keywords

    new member states; economic growth; foreign direct investment; vector autoregression;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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