Foreign direct investment and economic growth in transition economies

Abstract

Empirical research on the effects of Foreign Direct Investment (FDI) on economic growth mainly focuses on the US and the western European countries. The objective of this paper is to investigate the existence and the nature of the effect of FDI on the rate of growth of a panel of transition economies. We apply Bayesian analysis. Our results indicate that FDI does not exhibit any significant relationship with economic growth for the transition countries.