Skip to main content
SpringerLink
Log in

Foreign Direct Investments and Economic Growth in Central and Eastern Europe: A Panel-Based Analysis

  • Conference paper
  • First Online:
Emerging Issues in the Global Economy

Part of the book series: Springer Proceedings in Business and Economics ((SPBE))

Abstract

One of the most discussed issues related to foreign direct investments (FDI) refers to the impact they have on the economic and social welfare of a country. Moreover, if these effects are positive, the question is to what extent and by what instruments they can be enhanced by host country governments. In recent decades, the general political opinion on FDI changed, as they are rather understood as generating competitiveness and growth for host countries and less in terms of their negative effects on the economy. Our paper investigates the relationship between FDI flows and economic growth in countries from Central and Eastern Europe that are also EU members using the panel methodology and implementing various panel specifications that shed light on the particularities of this relationship among the five countries. We find that FDI have a positive contribution to economic growth in these economies, together with capital and, to some extent, international trade size, but also that country and period idiosyncrasies matter for a better understanding of economic growth determination.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 129.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 169.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 169.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    Results are available from authors.

References

  • Acarvaci, A., Ozturk, I.: Foreign direct investment, export and economic growth: empirical evidence from new EU countries. Roman. J Econ. Forecast. 2, 52–67 (2012)

    Google Scholar 

  • Apergis, N.: The relationship between foreign direct investment and economic growth: evidence from transition countries. Transit. Stud. Rev. 15(1), 37–51 (2008)

    Article  Google Scholar 

  • Badinger, H., Tondl, G.: Trade, Human Capital and Innovation: The Engines of European Regional Growth in the 1990s. ERSA conference papers No. ERSA02P043 (2002)

    Google Scholar 

  • Barro, R.J., Salla-i-Martin, X.: Economic Growth, 2nd edn. The MIT Press, Boston (2003)

    Google Scholar 

  • Beugelsdijk, S., Smeets, R., Zwinkels, R.: The impact of horizontal and vertical FDI on host’s country economic growth. Int. Bus. Rev. 17, 452–472 (2008)

    Article  Google Scholar 

  • Blomstrom, M., Globerman, S., Kokko, A.: The determinants of host country spillovers from foreign direct investment. CEPR Discussion Paper No. 2350 (2000)

    Google Scholar 

  • Borensztein, E., De Gregoria, J., Lee, J.W.: How does foreign direct investment affect economic growth? J. Int. Econ. 45(1), 115–135 (1998)

    Article  Google Scholar 

  • Carkovic, M.V., Levine, R.: Does foreign direct investment accelerate economic growth? University of Minnesota Department of Finance Working Paper, Minneapolis (2002)

    Google Scholar 

  • Choi, I.: Unit root tests for panel data. J. Int. Money Financ. 20(2), 249–272 (2001)

    Article  Google Scholar 

  • Curwin, K.D., Mahutga, M.C.: Foreign direct investment and economic growth: new evidence from post-socialist transition countries. Soc. Forces. 92(3), 1159–1187 (2014)

    Article  Google Scholar 

  • Damijan, J.P., Rojec, M.: Foreign direct investment and catching up of new EU member states: is there a flying geese pattern? Appl. Econ. Q. 53(2), 91–118 (2007)

    Google Scholar 

  • Demekas, D.G., Horváth, B., Ribakova, E., Wu, Y.: Foreign direct investment in European transition economies — the role of policies. J. Comp. Econ. 35, 369–386 (2007)

    Article  Google Scholar 

  • Estrin, S., Hanousek, J., Kocenda, E., Svejnar, J.: The effects of privatization and ownership in transition economies. J. Econ. Lit. 47(3), 1–30 (2009)

    Article  Google Scholar 

  • Gallova, Z.: A causal relationship between foreign direct investment, economic growth and export for Central and Eastern Europe. In: Proceedings of 30th International Conference Mathematical Methods in Economics, pp. 201–206 (2012)

    Google Scholar 

  • Grossman, G.M., Helpman, E.: Endogenous innovation in the theory of growth. J. Econ. Perspect. 8(1), 23–44 (1994)

    Article  Google Scholar 

  • Hanousek, J., Kočenda, E., Maurel, M.: Direct and indirect effects of FDI in emerging European markets: a survey and meta-analysis. Econ. Syst. 35(3), 301–322 (2011)

    Article  Google Scholar 

  • Im, K.S., Pesaran, M.H., Shin, Y.: Testing for unit roots in heterogeneous panels. J. Econ. 115(1), 53–74 (2003)

    Article  Google Scholar 

  • Iršová, Z., Havránek, T.: Determinants of horizontal spillovers from FDI: evidence from a large meta-analysis. World Dev. 42, 1–15 (2013)

    Article  Google Scholar 

  • Johnson, A.: The Effects of FDI Inflows on Host Country Economic Growth CESIS Working Paper Series, Paper No. 58. Royal Institute of Technology, Sweden (2006)

    Google Scholar 

  • Lall, S., Narula, R.: Foreign direct investment and its role in economic development: do we need a new agenda? Eur. J. Dev. Res. 16(3), 447–464 (2004)

    Article  Google Scholar 

  • Levin, A., Lin, C.-F., Chu, C.-S.: Unit root tests in panel data: asymptotic and finite-sample properties. J. Econ. 108(1), 1–24 (2002)

    Article  Google Scholar 

  • Maddala, G.S., Wu, S.: A comparative study of unit root tests with panel data and a new simple test. Oxf. Bull. Econ. Stat. 61(S1), 631–652 (1999)

    Article  Google Scholar 

  • Mankiw, N.G.: Principles of Economics, 7th edn. South-Western Cengage Learning, Stamford (2015)

    Google Scholar 

  • Moura, R., Forte, R.: The Effects of Foreign Direct Investment on the Host Country Economic Growth – Theory and Empirical Evidence, FEP Working Papers 390. Universidade do Porto, Faculdade de Economia do Porto (2010)

    Google Scholar 

  • Prochniak, M.: Determinants of economic growth in Central and Eastern Europe: the global crisis perspective. Post-Communist Econ. 23(4), 449–468 (2011)

    Article  Google Scholar 

  • Tiwari, A.K., Mutascu, M.: Economic growth and FDI in Asia: a panel-data approach. Econ. Anal. Policy. 41(2), 173–187 (2010)

    Article  Google Scholar 

  • Zykovic, S., Zykovic, I.T., Grdinic, M.: A VECM approach to detangling growth, exports, imports and FDI knot in selected CEE countries. Croat. Oper. Res. Rev. 5, 161–175 (2014)

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Lucian Blaga University of Sibiu, Sibiu, Romania

    Lucian Belaşcu

  2. Bucharest University of Economic Studies, Bucharest, Romania

    Oana Popovici & Alexandra Horobeţ

Authors
  1. Lucian Belaşcu
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Oana Popovici
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Alexandra Horobeţ
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Lucian Belaşcu .

Editor information

Editors and Affiliations

  1. Faculty of Economic Sciences, Lucian Blaga University of Sibiu, Sibiu, Romania

    Silvia Cristina Mărginean

  2. Faculty of Economic Sciences, Lucian Blaga University of Sibiu, Sibiu, Romania

    Claudia Ogrean

  3. Faculty of Economic Sciences, Lucian Blaga University of Sibiu, Sibiu, Romania

    Ramona Orăștean

Rights and permissions

Reprints and permissions

Copyright information

© 2018 Springer International Publishing AG

About this paper

Check for updates. Verify currency and authenticity via CrossMark

Cite this paper

Belaşcu, L., Popovici, O., Horobeţ, A. (2018). Foreign Direct Investments and Economic Growth in Central and Eastern Europe: A Panel-Based Analysis. In: Mărginean, S., Ogrean, C., Orăștean, R. (eds) Emerging Issues in the Global Economy. Springer Proceedings in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-71876-7_4

Download citation

Publish with us

Policies and ethics

Search

Navigation