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Foreign Direct Investments and Economic Growth Nexus in the CEE Countries

Promotion of foreign direct investments (FDI) as the vehicle of convergence has caused a surge of FDI in developing countries in the last few decades. Goal of this paper is to give a short overview of FDI and economic growth relationship while exploring factors that could have affected it in the case of Central and Eastern European (CEE) countries. It also strives to recognise recent trends that could further shape this relationship and gives recommendationfor further indepth research. This paper is based on the systematic analysis of previously published relevant scientific papers in the field of FDI and economic growth relationship. Reviewing a vast number of empirical studies pointed out to varying FDI effects in developing countries, mostly due to the chosen sample, model construction, and econometric model choices. Investigating a range of determinants and effects in CEE countries also does not point to homogeneity both in flows and effects. This leads us to the need of recognising the accentuating heterogeneity among countries within the future research in this field, as well as the need of matching FDI to industrial policy in order to enable it to generate positive outcomes for the host country.

Foreign direct investment, economic growth, CEE

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