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Impact of foreign direct investment on Croatian manufacturing exports

Author

Listed:
  • Goran Vuksic

    (Institute of public finance, Zagreb)

Abstract

The exports of Croatian manufacturing industry have been stagnating over the last decade or so. Over the same period there have been relatively high inflows of foreign direct investment (FDI) into industry. The aim of this paper is to examine, after controlling for other potentially significant variables, whether these inflows have had an impact on export performance. Using the panel data approach for 21 manufacturing industry sectors over the period between 1996 and 2002, it is found that FDI has positively and significantly affected exports, but the extent of this impact was relatively low. This implies that there is a potential for improving the export performance of Croatian manufacturing industry by attracting more FDI into this sector. Policy makers should try to enhance the potential positive effects of FDI by targeting specific export-oriented greenfield foreign investment, and, in addition, implement measures to increase potential spillover effects.

Suggested Citation

  • 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.
  • Handle: RePEc:ipf:finteo:v:29:y:2005:i:2:p:131-158
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    File URL: http://www.ijf.hr/eng/FTP/2005/2/vuksic.pdf
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    References listed on IDEAS

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    1. Patrick P. Walsh & Alexander Repkine, 1998. "European Trade and Foreign Direct Investment U-Shaping Industrial Output in Central and Eastern Europe; Theory and Evidence," IMF Working Papers 98/150, International Monetary Fund.
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    3. Campos, Nauro F & Kinoshita, Yuko, 2002. "Foreign Direct Investment as Technology Transferred: Some Panel Evidence from the Transition Economies," Manchester School, University of Manchester, vol. 70(3), pages 398-419, June.
    4. Salvador Barrios & Holger Goerg & Eric Strobl, 2003. "Explaining Firms' Export Behaviour: R&D, Spillovers and the Destination Market," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(4), pages 475-496, September.
    5. Holger Görg & David Greenaway, 2004. "Much Ado about Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?," World Bank Research Observer, World Bank Group, vol. 19(2), pages 171-197.
    6. James R. Markusen, 2004. "Multinational Firms and the Theory of International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633078, January.
    7. Haishun Sun, 2001. "Foreign Direct Investment and Regional Export Performance in China," Journal of Regional Science, Wiley Blackwell, vol. 41(2), pages 317-336.
    8. Robert E. Lipsey, 2002. "Home and Host Country Effects of FDI," NBER Working Papers 9293, National Bureau of Economic Research, Inc.
    9. Carstensen, Kai & Toubal, Farid, 2004. "Foreign direct investment in Central and Eastern European countries: a dynamic panel analysis," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 3-22, March.
    10. Kunst, Robert M & Marin, Dalia, 1989. "On Exports and Productivity: A Causal Analysis," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 699-703, November.
    11. Tihomir P Stucka, 2004. "The Effects of Exchange Rate Change on the Trade Balance in Croatia," IMF Working Papers 04/65, International Monetary Fund.
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    Citations

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    Cited by:

    1. E. Nur Özkan-Günay, 2011. "Determinants of FDI Inflows and Policy Implications: A Comparative Study for the Enlarged EU and Candidate Countries," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 47(0), pages 71-85, September.
    2. Maja Bukovšak & Gorana Lukinić Čardić & Nina Ranilović, 2017. "Structure of Capital Flows and Exchange Rate: The Case of Croatia," Working Papers 52, The Croatian National Bank, Croatia.
    3. E. Nur Özkan-Günay, 2011. "Determinants of FDI Inflows and Policy Implications: A Comparative Study for the Enlarged EU and Candidate Countries," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 47(0), pages 71-85, September.
    4. 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.
    5. Marina Tkalec & Maruska Vizek, 2014. "Real estate boom and export performance bust in Croatia," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics, vol. 32(1), pages 11-34.
    6. Vida Bobić, 2010. "Income and Price Elasticities of Croatian Trade – A Panel Data Approach," Working Papers 25, The Croatian National Bank, Croatia.

    More about this item

    Keywords

    foreign direct investment; exports; models with panel data; Croatia;

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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