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Foreign Direct Investment, Export and Economic Growth: Empirical Evidence from New EU Countries

Author

Listed:
  • Acaravci, Ali

    (Mustafa Kemal University, Faculty of Economics and Administrative Sciences, Antakya-Hatay, Turkey, Tel: +90 326 2455813/1233,)

  • Ozturk, Ilhan

    (Cag University, Faculty of Economics and Administrative Sciences, Mersin, Turkey. Tel:+903246514800, Fax:+903246514828.)

Abstract

Whether foreign direct investment (FDI) is beneficial to host country growth or not is a question debated since a long time. This paper provides a survey of the literature on FDI, export and growth, and empirically investigates the causal relationship between economic growth, export and FDI for the ten transition European countries (Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovak Republic and Slovenia). The ARDL bounds testing approach is used to investigate the existance of long-run relationship between FDI, export and economic growth for these countries. After detection of cointegratin relationship, the error-correction based Granger causality test is employed to examine the both long-run and short-run causality issues between the variables by using quarterly data from 1994 to 2008. These causality results reveal that there is causal relationship between FDI, export and economic growth in four out of ten countries considered.

Suggested Citation

  • Acaravci, Ali & Ozturk, Ilhan, 2012. "Foreign Direct Investment, Export and Economic Growth: Empirical Evidence from New EU Countries," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 52-67, June.
    • Handle: RePEc:rjr:romjef:v::y:2012:i:2:p:52-67
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    FDI; causality; Bounds testing approach; export; economic growth; EU countries.;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • 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
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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