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Investment incentives as instrument of motivation of firms and economic stabilization

Author

Listed:
  • Petr Musil

    (College of Polytechnics Jihlava, Czech Republic)

  • Veronika Hedija

    (College of Polytechnics Jihlava, Czech Republic)

Abstract

Investment incentives are mostly presented as an efficient tool of economic policy to eliminate negative impacts of economic cycle and also as the tools of motivation of firms to generation of investment. The aim of the paper is to verify the relationship between investment incentives and business cycle in the Czech Republic. There is used the data of CzechInvest, Czech Statistical Office and Organisation for Economic Cooperation and Development. To verify the link between the investment incentives and the business cycle, the Pearson correlation coefficient and Spearman correlation coefficient was used. There has been identified moderate positive relationship between the volume of the state support and the growth of the gross domestic product in constant prices. The link between investment incentives and output gap was not statistically significant. The study brings new insights on the field of investment incentives as an instrument of stabilization of economy. Investment incentives are important in terms of stimulating the investment activity of firms. Findings of the study answer the question of whether the government behaves responsibly in the area of investment incentives. The findings show that the policy of investment incentives does not respond flexibly to the current needs of the Czech economy.

Suggested Citation

  • Petr Musil & Veronika Hedija, 2020. "Investment incentives as instrument of motivation of firms and economic stabilization," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(2), pages 578-589, December.
    • Handle: RePEc:ssi:jouesi:v:8:y:2020:i:2:p:578-589
    DOI: 10.9770/jesi.2020.8.2(35)
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    References listed on IDEAS

    as
    1. Carlos Rodríguez & Ricardo Bustillo, 2015. "Foreign Direct Investment and the Business Cycle: New Insights after the Great Recession," Prague Economic Papers, Prague University of Economics and Business, vol. 2015(2), pages 136-153.
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    3. Daly, Michael & Gorman, Ian & Lenjosek, Gordon & MacNevin, Alex & Phiriyapreunt, Wannakan, 1993. "The impact of regional investment incentives on employment and productivity : Some Canadian evidence," Regional Science and Urban Economics, Elsevier, vol. 23(4), pages 559-575, September.
    4. Halit Yanikkaya & Hasan Karaboga, 2017. "The Effectiveness of Investment Incentives in the Turkish Manufacturing Industry," Prague Economic Papers, Prague University of Economics and Business, vol. 2017(6), pages 744-760.
    5. Philipp Harms & Pierre†Guillaume Méon, 2018. "Good and useless FDI: The growth effects of greenfield investment and mergers and acquisitions," Review of International Economics, Wiley Blackwell, vol. 26(1), pages 37-59, February.
    6. repec:prg:jnlpep:v:preprint:id:641:p:1-17 is not listed on IDEAS
    7. Gerhard Untiedt & Hans Joachim Schalk, 2000. "Regional investment incentives in Germany: Impacts on factor demand and growth," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 34(2), pages 173-195.
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    Cited by:

    1. Aneta Bobenič Hintošová & František Sudzina & Terézia Barlašová, 2021. "Direct and Indirect Effects of Investment Incentives in Slovakia," JRFM, MDPI, vol. 14(2), pages 1-12, February.
    2. Štefan Bojnec & Sabina Žampa, 2021. "Subsidies and Economic and Financial Performance of Enterprises," JRFM, MDPI, vol. 14(11), pages 1-16, October.

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    More about this item

    Keywords

    investment incentives; business cycle; Czech Republic; economic stability; gross domestic product;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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