The significance of foreign direct investment (FDI) and trade openness: evidence from nine European economies

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F62156489%3A43110%2F25%3A43926662" target="_blank" >RIV/62156489:43110/25:43926662 - isvavai.cz</a>
Result on the web
<a href="https://doi.org/10.1007/s43546-025-00798-8" target="_blank" >https://doi.org/10.1007/s43546-025-00798-8</a>
DOI - Digital Object Identifier
<a href="http://dx.doi.org/10.1007/s43546-025-00798-8" target="_blank" >10.1007/s43546-025-00798-8</a>

Result language
angličtina
Original language name
The significance of foreign direct investment (FDI) and trade openness: evidence from nine European economies
Original language description
This study examines the impact of foreign direct investment (FDI) and trade openness on economic growth in nine European countries using World Bank data (1995-2021). The analysis employs the Pooled Mean Group (PMG) Autoregressive Distributed Lag (ARDL) model to capture both short- and long-run dynamics. The findings indicate that FDI has a positive short-term effect but a negative long-term impact on economic growth. Similarly, trade openness stimulates growth in the short run but exerts a negative influence in the long run. Gross fixed capital formation has no immediate effect on GDP per capita but contributes positively in the long term. Granger causality tests reveal a unidirectional relationship from GDP per capita to both trade openness and gross fixed capital formation, while a bidirectional relationship exists between gross fixed capital formation and trade openness. These findings suggest the need for balanced policy measures to maximize the benefits of FDI and trade openness while mitigating long-term risks. Policymakers should focus on strengthening domestic industries, enhancing economic resilience, and implementing strategies to improve the absorptive capacity of FDI to optimize its long-run contributions to growth.
Czech name
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Czech description
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Type
J<sub>SC</sub> - Article in a specialist periodical, which is included in the SCOPUS database
CEP classification
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OECD FORD branch
50202 - Applied Economics, Econometrics

Project
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Continuities
I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Publication year
2025
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

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