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The impact of FDI on economic growth in Eurozone countries

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  • Pegkas, Panagiotis

Abstract

The purpose of the study is twofold: Firstly, to analyze the relationship between the foreign direct investments and economic growth and secondly, to estimate the effect of foreign direct investments on economic growth in the Eurozone countries over the period of 2002–2012. The paper employs panel data estimations to test the relationship between the variables. The empirical analysis reveals that there is a positive long-run cointegrating relationship between FDI stock and economic growth. By using the Fully Modified OLS (FMOLS) and Dynamic OLS (DOLS) methods the elasticity of GDP with respect to FDI is 0.054% and 0.147%, respectively. The results also indicate that the stock of foreign direct investment is a significant factor that positively affects economic growth in the Eurozone countries.

Suggested Citation

  • Pegkas, Panagiotis, 2015. "The impact of FDI on economic growth in Eurozone countries," The Journal of Economic Asymmetries, Elsevier, vol. 12(2), pages 124-132.
    • Handle: RePEc:eee:joecas:v:12:y:2015:i:2:p:124-132
    DOI: 10.1016/j.jeca.2015.05.001
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    References listed on IDEAS

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    More about this item

    Keywords

    Economic growth; FDI; Eurozone; Panel data;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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