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Corresponding Author:
Nicholaos Dritsakis, Department of Applied Informatics, University of Macedonia, Economics and Social Sciences, Thessaloniki, Greece

Pavlos Stamatiou, Department of Applied Informatics, University of Macedonia, Economics and Social Sciences, Thessaloniki, Greece

Foreign Direct Investments, Exports, Unemployment and Economic Growth in the New EU Members – A Panel Data Approach

Volume 70 - Issue 4, October 2017
(pp. 443-468)
JEL classification: C22, C33, E31, E50, H60, O16
Keywords: Economic Growth, Foreign Direct Investments, Exports, Unemployment, FMOLS, DOLS, Causality


Foreign direct investments and exports play an important role in economic growth worldwide. Particularly, foreign direct investments have been considered as one of the best alternatives to fuel economic growth mainly for developing countries. Policy, macroeconomic stability of each country as well as the labor market of an economy are some of the main aspects analyzed by foreign investors before investing in a country. In this paper we study the interdependencies among foreign direct investment, exports, unemployment and economic growth for thirteen new member countries of European Union (EU) for the period 1995-2013. The econometric methodology, based on error correction model is used to analyze the short and long term causal relationship between the examined variables. The main finding of the study is that there is bidirectional long term causal relationship between exports and economic growth and unidirectional long term causal relationship between economic growth and unemployment. Also, the results of the paper show that there is a short run unidirectional causality between exports and foreign direct investments.

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Institute for International Economics
of the Genoa Chamber of Commerce

Istituto di Economia Internazionale
Camera di Commercio di Genova
Via Garibaldi, 4 (III piano) - 16124 Genova (Italy)