Foreign direct investments are seen as a prerequisite for gaining and maintaining competitiveness. The research objective of this study is to examine the relationship between foreign direct ...investment (FDI) and economic growth in “new” European Union member countries using various unit root, cointegration, as well as causality tests. The paper employs annual data for FDI and gross domestic product (GDP) from 2002 to 2018 for the 13 most recent members of European Union (EU13): Bulgaria, Croatia, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia and Slovenia. An estimated panel ARDL (PMG) model found evidence that there is a long-run equilibrium between the LogGDP, LogFDI and LogFDIP series, with the rate of adjustment back to equilibrium between 3.27% and 20.67%. In the case of the LogFDI series, long-run coefficients are highly statistically significant in all four models, varying between 0.0828 and 0.3019. These coefficients indicate that a 1% increase in LogFDI increases LogGDP between 0.0828% and 0.3019%. Results of a Dumitrescu-Hurlin panel causality test indicated that a relationship between the GDP growth rate and FDI growth rate is only indirect. Finally, only weak evidence was shown that FDI had a statistically significant impact on GDP in the EU13 countries over the period 2002-2018. This report of findings contributes to the literature concerning FDI and economic growth, namely regarding the current understanding of the relationship between these two factors.
The paper examines the relationship between foreign direct investment (FDI) and economic growth in Croatia over the period 2000-2019, based on quarterly data. The research data were retrieved from ...the Croatian National Bank and Eurostat databases. Two options of time series were considered: (1) logarithm of GDP growth rate and logarithm of FDI and (2) logarithm of GDP growth rate and logarithm of FDI/GDP. The conducted research employed three cointegrations tests: Engle-Granger cointegration test, Johansen cointegration test, bounds cointegration tests (ARDL model). Results of three cointegration tests indicated that there is no long-run equilibrium relationship between quarterly GDP growth rate and any of the FDI series. Lack of long-run equilibrium relationship between GDP growth rate and FDI means also that there is no Granger causality relationship between these series. In other words, FDI have no statistically significant impact on the growth rate of the GDP in Croatia for the period being investigated. This research study has important theoretical and practical implications. One of the possible explanations would be in the type of FDI inflow, mostly brownfield FDI. However, greenfield FDI is the one generating more positive effects on the recipient country and countries should focus their efforts to attract this type of FDI.
Globalisation brings significant challenges to economies worldwide. Smart specialisation is one of the tools that helps countries improve their innovation potential, thus improving their economic ...performance and competitiveness. Smart specialisation involves identifying a country’s competitive advantages in order to develop targeted strategies aimed at enhancing its competitiveness. The main objective of the paper is to identify innovation and smart specialisation challenges the European Union economies are facing. The paper aims to provide an overview of current innovation performance of the European Union Member States, as well as their smart specialisation strategies, focusing on their chosen thematic priority areas. In doing so, the contribution of the paper is twofold. First, it gives an overview of the main features of smart specialisation concept. Second, it provides an overview of innovation performance of the European Union Member States and their smart specialisation strategies.
This paper is aimed at examining the fact whether foreign direct investment (FDI) and exports do contribute to economic growth in the thirteen European Union (EU) new member states (namely Bulgaria, ...Croatia, Cyprus, Czech, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia, Slovenia) during the period from 2005 to 2020 or not. Various statistical tests were performed in order to examine the relationship and causality among the three observed series, including unit-root tests, the Kao and Pedroni cointegration tests, and finally the modified causality test. The obtained results are mixed. Although cointegration was established between FDI, exports and growth, the estimation of the long-term coefficients varied to such an extent that only ambiguous conclusions about the effect of FDI and exports on the growth of the real gross domestic product (GDP) could be reached. The research results imply the fact that positive effects of FDI and exports are neither automatic nor equal in all the countries, but the same rather depend on the many factors and conditions that the governments of the selected states should consider when designing policy measures for attracting FDI and promoting exports.
The main objective of this paper is to analyze the causal relationship between foreign direct investment (FDI), exports, and economic growth in the Republic of Croatia for the period 2000-2020 and ...determine the implications of research results on corporate management. The management of the investment enterprise is usually interested in high returns, whereas the management of the recipient enterprise is interested in higher productivity, spillovers, and larger market share on domestic and international markets. Several methodological approaches, including unit root tests, cointegration tests, and Granger causality test, were used to assess the relationship between gross domestic product (GDP) growth rate, on the one side, and the share of FDI and total exports of goods and services in real GDP, on the other side. The results of cointegration tests indicated there is no long-term relationship between the real GDP growth rate, the share of FDI, and the share of exports of goods and services in real GDP. Based on the Granger causality test, it cannot be concluded that there is no causal relationship between the analysed variables. Finally, the paper discusses the implications of the conducted research for corporate management. The results indicate that managers are not discouraged by the fact that FDI is not correlated to economic growth, as investment decisions are determined by numerous factors and not primarily by the growth rate of a recipient country.
The main idea of the paper is to determine whether incentive policies contribute to economic growth. The goal of the research is to examine whether foreign direct investments and export promote ...economic growth with the purpose of determining a causal relationship between the variables and then identifying implications for policy measures. Policy makers design and implement various incentive policies but those often do not bring expected benefits. A careful consideration of budget costs and benefits is therefore required. Various econometric methods on different series definitions are used to ensure the robustness of the findings, including unit-root tests with structural break, Engle-Granger cointegration tests, Johansen cointegration test, and Granger causality test. Empirical testing was conducted to test the hypothesis that incentive policies do not fulfill their purpose in ensuring growth. Findings reveal that foreign direct investment and export of goods and services do not have an unequivocally statistically significant impact on the economic growth in the Republic of Croatia which leads to the conclusion that incentive measures did not fulfill their potential.
This research examined the sustainability of merchandise trade flows between Croatia and other European Union (EU) member states. Merchandise exports and imports were disaggregated into bilateral ...merchandise trade flows between Croatia and nineteen EU trading partners for the period 1999-2014. Following Granger-causality and cointegration tests for panel data, we specified the model to be estimated. Using a pooled mean group (PMG) estimator for dynamic heterogeneous panel data, the relationship between Croatian merchandise export and import was assessed empirically. Research results revealed unsustainable Croatian merchandise exports and imports vis-?-vis nineteen EU partners.
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This paper employs a quantile regression approach to explore the determinants
and properties of international foreign exchange reserves in Serbia and
North Macedonia, at various foreign exchange ...levels. The observed period
covers quarterly data for 2005q1-2019q1. The results reveal
quantile-dependent determinants of foreign exchange reserves and enable
comparison between the two countries, showing co-movements between monetary
policy and economic fluctuations. Following the estimates obtained in this
research, the paper compares the role of foreign exchange reserves in Serbia
and North Macedonia.
The paper aims to examine Croatian import demand elasticities to changes in income and relative prices while allowing time variation in parameters of import demand. Data sample consist of quarterly ...time series data over the period 2000 q1 -2018 q3. Following state space model with time-varying parameters approach estimates were obtained and tested. The results revealed persistent and high income elasticity of import demand in Croatia. However, the role of relative prices has changed over the observed period and eventually cannot be distinguished from zero. The findings from this research supported the hypothesis of prices convergence in Croatia towards the prices within European Monetary Union member countries. Furthermore, results found no significant effect on Croatian import demand when Croatia joined the European Union. The research results indicate that, due to a relatively high income elasticity of import demand and convergence of import prices, production of innovative and sophisticated products should be facilitated.
Globalisation brings significant challenges to economies worldwide. Smart specialisation is one of the tools that helps countries improve their innovation potential, thus improving their economic ...performance and competitiveness. Smart specialisation involves identifying a country's competitive advantages in order to develop targeted strategies aimed at enhancing its competitiveness. The main objective of the paper is to identify innovation and smart specialisation challenges the European Union economies are facing. The paper aims to provide an overview of current innovation performance of the European Union Member States, as well as their smart specialisation strategies, focusing on their chosen thematic priority areas. In doing so, the contribution of the paper is twofold. First, it gives an overview of the main features of smart specialisation concept. Second, it provides an overview of innovation performance of the European Union Member States and their smart specialisation strategies.
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