engleski

A VECM Approach to Detangling Growth, Exports, Imports and FDI Knot in Selected CEE Countries

The authors analyse 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 positive long-run influence of 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 positive in the short run. By using B. Horvat research on this subject, a logical explanation of this sort of paradoxical behavior is suggested. Second uncommon result is the long run positive relationship between GDP and 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 countries try to achieve economic growth through slower but stable, internally driven growth.

Error Correction Model ; FDI ; imports-coverage ratio ; gross fixed capital ; GDP ; economic growth ; CEE countries

The presented results are part of the scientific project “Porezni sustav i ekonomsko- socijalni odnosi hrvatskog društva” (No 13.02.1.2.02.), supported in part by University of Rijeka. This work has been supported in part by Croatian Science Foundation under the project Tax Policy and Fiscal Consolidation in Croatia (8174).