IDEAS home Printed from https://ideas.repec.org/a/ris/utmsje/0272.html
   My bibliography  Save this article

Foreign Direct Investment And Economic Growth Relationship In Croatia

Author

Listed:
  • Bilas, Vlatka

    (Faculty of Economics and Business, University of Zagreb, Croatia)

Abstract

It is often stated that foreign direct investment (FDI) influence positively economic growth of the host country, but empirical evidences are still heterogenous. The paper examines the relationship between the FDI and economic growth (real GDP) in Croatia for the period 1995–2018. The research data were retrieved from the World Bank database. Two options of time series were considered: (1) real GDP growth rate and logarithm of FDI and (2) real GDP growth rate and logarithm of FDI/GDP. In order to examine the relationship between FDI and real GDP different cointegration tests were employed, as well as Granger causality analysis for both options. Based on the conducted analysis following conclusions can be made: (1) results of the cointegration tests indicated that there is no long-run equilibrium relationship between real GDP growth rate and any of the foreign direct investment series; (2) results of Granger causality tests indicated that there is no causal relationship between real GDP growth rate and any of the foreign direct investment series. In other words, foreign direct investments have no statistically significant impact on the growth rate of the real GDP in Croatia for the period being investigated.

Suggested Citation

  • Bilas, Vlatka, 2019. "Foreign Direct Investment And Economic Growth Relationship In Croatia," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 10(2), pages 175-187.
    • Handle: RePEc:ris:utmsje:0272
    as

    Download full text from publisher

    File URL: http://utmsjoe.mk/files/Vol.%2010%20No.%202/UTMSJOE-2019-1002-04-Bilas.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Aneta Kosztowniak, 2016. "Verification of the Relationship between FDI and GDP in Poland," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 66(2), pages 307-332, June.
    2. Owolabi-Merus, Olasunkanmi, 2015. "How important is Foreign Direct Investment to Economic Growth? New Evidence from Nigeria," MPRA Paper 65796, University Library of Munich, Germany.
    3. Perron, Pierre & Vogelsang, Timothy J., "undated". "Level Shifts and Purchasing Power Parity," Instructional Stata datasets for econometrics levshift, Boston College Department of Economics.
    4. Zivot, Eric & Andrews, Donald W K, 2002. "Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 25-44, January.
    5. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    6. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
    7. Perron, Pierre & Vogelsang, Timothy J, 1992. "Nonstationarity and Level Shifts with an Application to Purchasing Power Parity," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(3), pages 301-320, July.
    8. Henrik Hansen & John Rand, 2006. "On the Causal Links Between FDI and Growth in Developing Countries," The World Economy, Wiley Blackwell, vol. 29(1), pages 21-41, January.
    9. Ivanović, Igor, 2015. "Impact of foreign direct investment (FDI) on domestic investment in Republic of Croatia," MPRA Paper 70076, University Library of Munich, Germany.
    10. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    11. Clemente, Jesus & Montanes, Antonio & Reyes, Marcelo, 1998. "Testing for a unit root in variables with a double change in the mean," Economics Letters, Elsevier, vol. 59(2), pages 175-182, May.
    12. Peter Boswijk, H., 1994. "Testing for an unstable root in conditional and structural error correction models," Journal of Econometrics, Elsevier, vol. 63(1), pages 37-60, July.
    13. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    14. MacKinnon, James G & Haug, Alfred A & Michelis, Leo, 1999. "Numerical Distribution Functions of Likelihood Ratio Tests for Cointegration," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(5), pages 563-577, Sept.-Oct.
    15. Anindya Banerjee & Juan Dolado & Ricardo Mestre, 1998. "Error‐correction Mechanism Tests for Cointegration in a Single‐equation Framework," Journal of Time Series Analysis, Wiley Blackwell, vol. 19(3), pages 267-283, May.
    16. Perron, Pierre, 1989. "The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Econometrica, Econometric Society, vol. 57(6), pages 1361-1401, November.
    17. Christian Bayer & Christoph Hanck, 2013. "Combining non-cointegration tests," Journal of Time Series Analysis, Wiley Blackwell, vol. 34(1), pages 83-95, January.
    18. Mete Feridun & Yaya Sissoko, 2011. "Impact of FDI on Economic Development: A Causality Analysis for Singapore, 1976 – 2002," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 4(1), pages 7-17, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sudeshna Ghosh, 2019. "Environmental Pollution, Income Inequality, and Household Energy Consumption: Evidence from the United Kingdom," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 10(02), pages 1-31, June.
    2. Turgut Türsoy, 2017. "Causality between Stock Prices and Exchange Rates in Turkey: Empirical Evidence from the ARDL Bounds Test and a Combined Cointegration Approach," IJFS, MDPI, vol. 5(1), pages 1-10, March.
    3. Faisal Faisal & Ruqiya Pervaiz & Nesrin Ozatac & Turgut Tursoy, 2021. "Exploring the relationship between carbon dioxide emissions, urbanisation and financial deepening for Turkey using the symmetric and asymmetric causality approaches," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(12), pages 17374-17402, December.
    4. Vinish Kathuria, 2019. "Growth and Investment: Testing for the Relationship for South Asian Countries," Millennial Asia, , vol. 10(3), pages 337-371, December.
    5. Ogali, Oscar I.O. & Okoro, Emeka E. & Olafuyi, Saburi G., 2023. "Assessing consensus on nexus between natural gas consumption and economic growth," Renewable and Sustainable Energy Reviews, Elsevier, vol. 187(C).
    6. Muntasir Murshed & Mohamed Elheddad & Rizwan Ahmed & Mohga Bassim & Ei Thuzar Than, 2022. "Foreign Direct Investments, Renewable Electricity Output, and Ecological Footprints: Do Financial Globalization Facilitate Renewable Energy Transition and Environmental Welfare in Bangladesh?," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 29(1), pages 33-78, March.
    7. Ahmed Samour & Omar Ikbal Tawfik & Magdalena Radulescu & Cristina Florentina Baldan, 2023. "Do Oil Price, Renewable Energy, and Financial Development Matter for Environmental Quality in Oman? Novel Insights from Augmented ARDL Approach," Energies, MDPI, vol. 16(12), pages 1-14, June.
    8. Chiu, Fan-Ping & Hsu, Chia-Sheng & Ho, Alan & Chen, Chi-Chung, 2016. "Modeling the price relationships between crude oil, energy crops and biofuels," Energy, Elsevier, vol. 109(C), pages 845-857.
    9. Tursoy, Turgut & Faisal, Faisal, 2018. "The impact of gold and crude oil prices on stock market in Turkey: Empirical evidences from ARDL bounds test and combined cointegration," Resources Policy, Elsevier, vol. 55(C), pages 49-54.
    10. Nasreen, Samia & Anwar, Sofia & Ozturk, Ilhan, 2017. "Financial stability, energy consumption and environmental quality: Evidence from South Asian economies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 67(C), pages 1105-1122.
    11. Shahbaz, Muhammad & Khraief, Naceur & Jemaa, Mohamed Mekki Ben, 2015. "On the causal nexus of road transport CO2 emissions and macroeconomic variables in Tunisia: Evidence from combined cointegration tests," Renewable and Sustainable Energy Reviews, Elsevier, vol. 51(C), pages 89-100.
    12. Hasanov, Fakhri J. & Shannak, Sa'd, 2020. "Electricity incentives for agriculture in Saudi Arabia. Is that relevant to remove them?," Energy Policy, Elsevier, vol. 144(C).
    13. Yongliang Zhang & Md. Qamruzzaman & Salma Karim & Ishrat Jahan, 2021. "Nexus between Economic Policy Uncertainty and Renewable Energy Consumption in BRIC Nations: The Mediating Role of Foreign Direct Investment and Financial Development," Energies, MDPI, vol. 14(15), pages 1-29, August.
    14. Joof, Foday & Samour, Ahmed & Ali, Mumtaz & Tursoy, Turgut & Haseeb, Mohammad & Hossain, Md. Emran & Kamal, Mustafa, 2023. "Symmetric and asymmetric effects of gold, and oil price on environment: The role of clean energy in China," Resources Policy, Elsevier, vol. 81(C).
    15. Akhand Akhtar Hossain, 2008. "Rural Labour Market Developments, Agricultural Productivity, and Real Wages in Bangladesh, 1950–2006," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 47(1), pages 89-114.
    16. Awaworyi Churchill, Sefa & Inekwe, John & Ivanovski, Kris & Smyth, Russell, 2019. "Dynamics of oil price, precious metal prices and the exchange rate in the long-run," Energy Economics, Elsevier, vol. 84(C).
    17. Tang, Chor Foon & Shahbaz, Muhammad, 2013. "Sectoral analysis of the causal relationship between electricity consumption and real output in Pakistan," Energy Policy, Elsevier, vol. 60(C), pages 885-891.
    18. Esra ALP & Ünal SEVEN, 2019. "Türkiye Konut Piyasasında Etkinlik Analizi," Istanbul Business Research, Istanbul University Business School, vol. 48(1), pages 84-112, May.
    19. Camgöz, Mevlüt & Topal, Mehmet Hanefi, 2022. "Identifying the asymmetric price dynamics of Islamic equities: Implications for international investors," Research in International Business and Finance, Elsevier, vol. 60(C).
    20. Brittle, Shane, 2009. "Ricardian Equivalence and the Efficacy of Fiscal Policy in Australia," Economics Working Papers wp09-10, School of Economics, University of Wollongong, NSW, Australia.

    More about this item

    Keywords

    cointegration; Granger causality;

    JEL classification:

    • 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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:utmsje:0272. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Assistant Professor. Dejan Nakovski, PhD (email available below). General contact details of provider: https://edirc.repec.org/data/feutmmk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.