IMPACT OF FOREIGN DIRECT INVESTMENT ON THE ECONOMIC GROWTH: THE CASE OF COMMONWEALTH OF INDEPENDENT STATES
IMPACT OF FOREIGN DIRECT INVESTMENT ON THE ECONOMIC GROWTH: THE CASE OF COMMONWEALTH OF INDEPENDENT STATES

Summary/Abstract: Economic theory suggests that free capital flows increase the efficiency of the resource allocation, and stimulate economic growth. Foreign direct investment (FDI) is seen as a kind of cure for all economic problems in countries that do not have a sufficient level of accumulation for starting economic growth. In this paper we will investigate the impact of FDI on economic growth in Commonwealth of Independent States (Armenia, Azerbaijan,Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russian Federation, Tajikistan and Ukraine) for the 2000-2015 period. Our assumption is that increase in FDI inflow will have positive impact on economic growth. The analysis is was carried out using the ARDL (Pooled Mean Group/ARDistributed Lag Models). This model is particularly convenient in a situation where all variables are stationary at different levels. The results shows strong and positive impact of FDI on economic growth.

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