The Impact of Foreign Direct Investments on Economic Growth in Transition Economies: Dynamic Panel Data Analysis

Article Information
Journal: Business and Economics Research Journal
Title of Article: The Impact of Foreign Direct Investments on Economic Growth in Transition Economies: Dynamic Panel Data Analysis
Author(s): Mustafa Ozcag, E. Yasemin Bozdaglioglu, Hatice Kucukkaya
Volume: 10
Number: 1
Year: 2019
Page: 41-54
ISSN: 2619-9491
DOI Number: 10.20409/berj.2019.155
Abstract
In the transition economies, together with the transition process, positive
developments in economic growth performances can be seen. In this study, the impact of foreign direct investment on the economic growth rates of 27 transition economies for the period 1997- 2016 is modeled within the theories of neoclassical and endogenous growth. In order to investigate this effect in the framework of Neoclassical and endogenous growth theories, the human capital factor also plays an important role. For this reason, the relationship between foreign direct investment and economic growth for the specified period is tested with the estimators Arellano-Bond, Arellano-Bondmax and Arellano-Bond 2 Stage GMM (Generalized Method of Moments) which are current dynamic panel model estimators. Economic growth, human capital and trade volume variables are statistically significant and the coefficients are
positive. The most striking result of working is; if foreign direct investment is supported by human capital growth, it will have much more impact on economic growth.

Keywords: Economic Growth, Transition Economies, Foreign Direct Investment, Dynamic Panel Data Analysis

JEL Classification: C23, F21, O47, P20

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