FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH OF THE CENTRAL AND SOUTHEAST EUROPEAN COUNTRIES

Authors

  • Vasilj Žarković Faculty of Economics, University of Banja Luka
  • Dragan Gligorić Faculty of Economics, University of Banja Luka
  • Nikola Žarković National Bank of Serbia

DOI:

https://doi.org/10.7251/ACE1727027Z

Keywords:

foreign direct investment, economic growth, the structure of foreign direct investment

Abstract

Economic theory suggests that free capital ?ows increase the efficiency of the resource allocation and stimulate economic growth. Foreign direct investment (FDI) is seen as a remedy for all economic problems in countries that do not have a sufficient level of accumulation to start economic growth. According to economic criteria of Copenhagen, countries that are in the process of European integration should have a functioning market economy able to cope with competition and market forces within the European Union. The greatest expectations regarding the development of a competitive economy in the Southeast European (SEE) countries are precisely related to attraction and exploitation of the positive e?ects of FDI. This paper explores the impact of FDI on economic growth of the Central European (CE) countries and the SEE countries. The experience of the CE countries can be beneficial for the SEE countries following them in the process of European integration. The results show that FDI ?ows to the SEE region are significantly lower than to the CE region. Panel analysis has shown a statistically significant impact of FDI on economic growth in both regions. However, in absolute terms the impact of FDI on economic growth in the SEE region is almost negligible.

Downloads

Download data is not yet available.

References

Adewumi, S. (2006). Te Impact of FDI on Growth in Developing Countries: An African Experience. Retrieved 11.05.2016 from: https://www.diva-portal.org/smash/get/diva2:4440/FULLTEXT01.pdf

Аlfaro, L. (2003). Foreign Direct Investment and Growth: Does the Sector Matter? Retrieved 12.05.2016 from: https://www.researchgate.net/publication/228966060_Foreign_Direct_Investment_and_Growth_does_the_sector_matter

Apostolov, M. (2016). Cobb–Douglas production function on FDI in Southeast Europe. Journal of Economic Structures, (2016) 5: 10. doi:10.1186/s40008-016-0043. Retrieved 12.03.2017 from: https://link.springer.com/article/10.1186/s40008-016-0043-x#Tab6

Asteriou, D. & Hall, S. G. (2016). Aplied Econometrics. 3rd Edition. Palgrave MacMilan.

Bogdan, Ž. (2009). Utjecaj FDI-ja na gospodarski rast europskih tranzicijskih zemalja. EFZG working paper series, No. 06. Retrieved 20.10.2016 from: http://hrcak.srce.hr/13697

Borensztein, E., De Gregorio, J., & Lee, J-W. (1995). How Does Foreign Direct Investment Affect Economic Growth? NBER Working paper, No. 5057. Retrieved 12.05.2016 from: http://www.nber.org/papers/w5057

EBRD. (2015). Transition Report 2015-16. Retrieved 12.06.2016 from: http://www.ebrd.com/news/publications/transition-report/ebrd-transition-report-201516.html

Estrin, S. & Uvalic, M. (2015). Foreign Direct Investment in the Western Balkans: What role has it played during transition? London School of Economics and University of Perugia.

Estrin, S., & Uvalic, M. (2013). Foreign direct investment into transition economies: Are the Balkans different? London School of Economic and Political Science, (LEQS Paper No. 64/2013).

Hlavacek, P. & Bal-Domanska, B. (2016). Impact of Foreign Direct Investment on Economic Growth in Central and Eastern European Countries. Inzinerine EkonomikaEngineering Economics, 2016, 27(3), 294–303. Retrieved 15.08.2016 from: http://www.inzeko.ktu.lt/index.php/EE/article/viewFile/3914/7923

Iamsiraroj, S. & Doucouliagos, H. (2015). Does Growth Attract FDI? Economics, Discussion paper No. 2015-18. Retrieved 12.05.2016 from: http://www.economics-ejournal.org/economics/discussionpapers/2015-18/fle

International Monatary Found (IMF). (2009). Balance of payments and international investment position manual. Washington. Retrieved 12.02.2015 from: http://www.imf.org/external/pubs/f/bop/2007/pdf/bpm6.pdf

International Monetary Found. (2016). World Economic Outlook Databases, april 2016. Retrieved 14.11.2016 from: https://www.imf.org/external/pubs/f/weo/2016/01/weodata/index.aspx

Khaliq, A. & Noy, I. (2007). Foreign Direct Investment and Economic Growth: Empirical Evidence from Sectoral Data in Indonesia. Retrieved 10.05.2016 from: http://www.economics.hawaii.edu/research/workingpapers/WP_07-26.pdf

Khordagui, N. H.& Saleh, G. (2013). FDI and Absorptive Capacity in Emerging Economies. Topics in Middle Eastern and African Economies Vol. 15, No. 1. Retrieved 12.10.2016 from: http://meea.sites.luc.edu/volume15/pdfs/FDI-Absorptive-Capacity.pdf

Kherf, S. & Soliman, M. (2005). FDI And Economic Growth In CEE And MENA Countries: A Tale Of Two Regions. International Business & Economics Research Journal, 4 (12).

Kragulj, D. & Parezanin, M. (2015). Foreign Direct Investment and Economic Growth in Times of Economic Crises: Evidence frome Southeast European Countries. European Scientifc Journal Vol.1, ISSN: 1857 – 7881. Retrieved 14.10.2016 from: http://eujournal.org/index.php/esj/article/view/6439

Lyroudi, K., Papanastasiou, J. & Athanasios, V. (2004). Foreign Direct Investment And Economic Growth In Transition Economies. Retrieved 12.05.2016 from: http://www.asecu.gr/Seeje/issue02/lyroudi.pdf

Marevar, A. (2003). Economic Growth and Countires in Transition. Croatian Economic Surevey. Retrieved 10.01.2017 from: http://hrcak.srce.hr/fle/9613

Mathur S. K. et all. (2016). Does Domestic Energy Consumption Affect GDP of a Country? A Panel Data Study. Global Economy Journal. Retrieved 10.01.2017 from: http://apeaweb.org/confer/kkt16/papers/Mathur_Somesh.pdf

Mencinger, J. (2003). Does Foreign Direct Investment Always Enhance Economic Growth?” Kyklos, Vol. 56, No. 4.

Mockevičius, P. (2014). Te Effect FDI on Economic Growth on Central and Eastern Europe: Merger and Aquistitons and Greenfeld Investment. MSc Economics Tesis. Sweden: Lound University. Retrieved 12.08.2016 from: https://lup.lub.lu.se/studentpapers/search/publication/4461410.

Pablo Dapena, J. (2006). Volatility of GDP, Macro Applications and Policy Implications of Real Options for Structure of Capital Markets. CEMA Working Papers: Serie Documentos de Trabajo. Retrieved 12.01.2017 from: https://ideas.repec.org/p/cem/doctra/320.html.

Pesaran, M. H., Shin, J. & Smith, R. P. (1997). Pooled Estimation of Long-Run Relationships in Dynamic Heterogenous Panels. Retrieved 20.11.2016 from: http://www.econ.cam.ac.uk/people/emeritus/mhp1/jasaold.pdf.

Popović-Avrić S., Đenić M., Milenković, M. (2014). Investment policies of the Western Balkans as a factor of economic development in the post-crisis period. Zbornik radova, 10. Međunarodna ASECU. Retrieved 15.08.2016 from: http://www.asecu.gr/fles/10th_conf_fles/avric-djenic-milenkovic.pdf.

Pugel, A. T. (2016). International Economics. New York: McGraw-Hill Education. Silajdžić, S. & Mehić, E. (2015). Knowledge Spillovers, Absorptive Capacities and the Impact of FDI on Economic Growth: Empirical Evidence from Transition Economies. Procedia - Social and Behavioral Sciences 195 ( 2015 ) 614 – 623. Retrieved 25.11.2016 from: http://www.sciencedirect.com/science/article/pii/S1877042815036216.

Stanišić, N. (2008). Do Foreign Direct Investments Increase Te Economic Growth in Southeastern European Transition Economies. South - Eastern Europe Journal of Economics 1, pp. 29-38. Retrieved 20.10.2016 from: http://www.asecu.gr/Seeje/issue10/stanisic.pdf.

Tiberiu Albulescu, C. (2015). Do Foreign Direct and Portfolio Investments Affect LongTerm Economic Growth in Central and Eastern Europe? Procedia Economics and Finance 23 (2015), pp. 507–512. Elsevier. Retrieved 12.08.2016 from: http://www.sciencedirect.com/science/article/pii/S2212567115005390.

Tintin, C. (2012). Does Foreign Direct Investment Spur Economic Growth and Development: A Comparative Study. Retrieved 10.05.2016 from: http://www.etsg.org/ETSG2012/Programme/Papers/73.pdf.

Umeora, C.E. (2013). Effects of Foreign Direct Investment (FDI) on Economic Growth in Nigeria. Retrieved 08.06.2016 from: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2285329.

UNCTAD. (2015). Te World Investment Report, 2015. Retrieved 12.12.2016 from: http://unctad.org/en/pages/DIAE/World%20Investment%20Report/WIR-Series.aspx.

Vo, X-V. & Batten, J.A. (2006). Te Importance of Social Factors when assessing the impact of foreign direct investment on economic growth. IIIS Discussion Paper No. 179. Retrieved 12.06.2016 from: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=932182.

World Bank Group. (2016). Doing Business 2016. Retrieved 15.06.2016 from: http://www.doingbusiness.org/rankings.

World Bank. (2016). World Development Indicators. Retrieved 10.12.2016 from: http://data.worldbank.org/data-catalog/world-development-indicators.

World Economic Forum (2015). Te Global Competitiveness Report 2015-2016. Retrieved 15.06.2016 from: http://reports.weforum.org/global-competitiveness-report-2015-2016.

Miljković, D. (2008). International fnances. Belgrade: Faculty of Economics.

Čenić-Jotanović, G. (2010). International economic relations. Laktaši: Grafomark, 2010.

Downloads

Published

2017-12-31

How to Cite

Žarković, V., Gligorić, D., & Žarković, N. (2017). FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH OF THE CENTRAL AND SOUTHEAST EUROPEAN COUNTRIES. Acta Economica, 15(27), 27–57. https://doi.org/10.7251/ACE1727027Z

Issue

Section

Original Scientific Papers