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Empirical relationship between Foreign Direct Investment and economic growth in Georgia
University West, Department of Economics and IT, Divison of Law, Economics, Statistics and Politics.
2017 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

The aim of this thesis is to investigate the relationship between Foreign Direct Investment (FDI) and economic growth in Georgia over the time period of 1997-2015. With the use of previous research and empirical theories, I expect a positive influence of FDI on economic growth in Georgia both in long-run and short-run. Further, this study considers additional determinant factors based on the previous studies and theories. Concerning the method used in this thesis, I apply Dickey-Fuller test in order to test unit roots for time series and Engle-Granger cointegration test to investigate their equilibrium relationship between the series. Further, I run a regression between the series to obtain the long-run relationship and Error Correction Model (ECM) to obtain the short-run relationship. The result confirms that FDI have a significant and positive effect on economic growth both in long-run and short-run. The result also illustrates that FDI along with other explanatory variables such as inflation have a long-run relationship with economic growth. Further, it is shown that in long run, population have a negative influence and Gross Capital Formation (GCF) have a positive influence on economic growth, however, the coefficients are not quite significant. In short-run, change in FDI, change in GCF, and change in population have a significant explanatory power in change in economic growth. Thus, the study shows that FDI inflow in Georgia has a positive effect on economic growth.

Place, publisher, year, edition, pages
2017. , p. 33
Keywords [en]
Foreign Direct Investment, FDI, Economic Growth, GDP, Georgia
National Category
Economics
Identifiers
URN: urn:nbn:se:hv:diva-11378Local ID: NAX500OAI: oai:DiVA.org:hv-11378DiVA, id: diva2:1135846
Subject / course
Nationalekonomi
Educational program
International Programme in Politics and Economics
Supervisors
Examiners
Available from: 2017-08-25 Created: 2017-08-24 Last updated: 2017-08-25Bibliographically approved

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