FDI AND ECONOMIC GROWTH - CENTRAL EUROPE

The relationship between foreign direct investment (FDI) inflows and economic growth is important for policy makers. A positive relationship between this two entities is theoretically expected but available empirical evidence does not always support this idea. Numerous articles bring the attempts to find the factors the presence of which boost, or reduce, the impact of FDI on GDP growth in the host country. Some authors conclude that FDI inflows exert a positive impact on economic growth only in the presence of a highly skilled labor force and trade openness and the more negative one the higher degree of corruption occurs. Others give results showing that FDI imply increase of GDP in developing countries but not in advanced economies. Bringing together, an ambiguity of relations is apparent. In this article, a FDI and GDP relation in Central European new EU members is studied. Evidently, the difficulties arise how to evaluate relevant characteristics of Czech Rep., Hungary, Poland, Slovakia as for their degree of development. Besides, all the countries do not take part in the FDI process for a sufficiently long time to assemble representative data sets. So, all the countries are studied by the help of panel data techniques and the group is enlarged by Austria, the results of which are used as a sort of verification of credibility of movements and influences found by the models.