Original scientific paper
https://doi.org/10.17535/crorr.2014.0005
A VECM approach to detangling growth, exports, imports and FDI knot in selected CEE countries
Saša Žiković
; Faculty of Economics, University of Rijeka
Ivana Tomas Žiković
orcid.org/0000-0002-9156-3479
; Faculty of Economics, University of Rijeka
Maja Grdinić
; Faculty of Economics, University of Rijeka
Abstract
The authors analyze the relationship between GDP, imports-coverage ratio (NEX), FDI and gross fixed capital formation (GFC) in selected CEE countries by using an error correction model. The empirical results confirm a positive long-run influence of the imports coverage ratio, FDI and GFC on GDP growth for all of the countries, except Croatia. In the case of Croatia, there is a significant negative feedback between FDI and GDP growth in the long run and a positive one in the short run. By using B. Horvat’s research on this subject, a logical explanation of this sort of paradoxical behavior is suggested. The second uncommon result is the long-run positive relationship between GDP and the imports-coverage ratio. The obtained result speaks in favor of a conservative approach to running a national economy, where the current account and the imports-coverage ratio are taken into account and the economic growth is achieved through slower but stable, internally driven growth.
Keywords
Error Correction Model; FDI, imports-coverage ratio; gross fixed capital; GDP; economic growth; CEE countries
Hrčak ID:
133694
URI
Publication date:
30.12.2014.
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