Abstract

SAPIENZA, Elvira. Foreign Direct Investment and growth in Central, Eastern and Southern Europe. Inv. Econ [online]. 2010, vol.69, n.271, pp.99-138. ISSN 0185-1667.

This paper examines the role of Foreign Direct Investment (FDI) in promoting growth in 25 Central, Eastern and Southern European countries (CESE) using a dynamic panel approach that includes lags of involved variables to mitigate the problem of serial correlation. It adopts also a ‘general-to-specific’ approach to deal with the problem of the omitted variable and uses different estimation methods to control for heterogeneity. The main finding is that FDI has a positive and significant impact on economic growth coupled with an open economic environment.

Keywords : Foreign Direct Investment; economic growth; transition economies.