Modelling of causal relationships between foreign direct investment, export and economic growth for Croatia

by Zuzana GALLOVÁ , Daniel STAVÁREK

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JEL classification

  • Open Economy Macroeconomics
  • Economic Growth of Open Economies

Keywords

Cointegration, economic growth, error correction model, export, foreign direct investment

Abstract

Foreign direct investment is generally considered to be an instrument how to stimulate economic growth of any country. For this purpose governments of transition countries try to encourage the inflow of foreign direct investment by various measures. The aim of this paper is to analyse the relation between foreign direct investment, economic growth and export in Croatia. For this purpose we apply cointegration analysis along with the vector error correction model. The results confirm the existence of a long-term relation between the variables analysed. We reveal a positive impact of GDP and negative impact of foreign direct investment on export.