COINTEGRATION AND CAUSALITY ANALYSIS BETWEEN FOREIGN DIRECT INVESTMENT, EXPORTS AND ECONOMIC GROWTH IN THE REPUBLIC OF CROATIA Cover Image

COINTEGRATION AND CAUSALITY ANALYSIS BETWEEN FOREIGN DIRECT INVESTMENT, EXPORTS AND ECONOMIC GROWTH IN THE REPUBLIC OF CROATIA
COINTEGRATION AND CAUSALITY ANALYSIS BETWEEN FOREIGN DIRECT INVESTMENT, EXPORTS AND ECONOMIC GROWTH IN THE REPUBLIC OF CROATIA

Author(s): Martina Sopta, Vlatka Bilas, Sanja Franc
Subject(s): National Economy, Economic history, Economic policy, International relations/trade, Economic development, Transformation Period (1990 - 2010), Present Times (2010 - today)
Published by: Ekonomski fakultet Sveučilišta u Splitu
Keywords: foreign direct investment; export; gross domestic product; Croatia; corporate management;

Summary/Abstract: 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.

  • Issue Year: 26/2021
  • Issue No: 2
  • Page Range: 145-158
  • Page Count: 14
  • Language: English
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