The effects of foreign direct investment on economic growth of Central and Eastern European countries.

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2016-08-25
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en
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This thesis analyses the effects of FDI on GDP per capita growth rates of selected Central and Eastern European countries in the period 1994 – 2014. The literature on this subject provides mixed empirical evidence, while the environment of these countries is a suitable testing ground for FDI growth effects. These effects are likely to be positive, although depending on countries' absorptive capacities. The theoretical model of a cross-country growth regression forms a basis for an estimation using panel data and as a method, GLS with seemingly unrelated regression assumptions. The study finds a positive, direct impact of FDI inflows on economic growth as hypothesised, while the other hypothesis concerning the conditionality of this impact is not supported by evidence – what is found is a lack of dependence of FDI growth effect on openness and private credit amount and a negative dependence on market institutions’ quality. Size of panels and quality of the data are some of the limitations of this study and further research directions are outlined.
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Faculteit der Managementwetenschappen