Title: FDI, trade and integration in the Western Balkan Countries: Is there any causality?

Authors: Ines Kersan-Skabic

Addresses: Department of Economics and Tourism, ''Dr. Mijo Mirkovic'', Juraj Dobrila University of Pula, P. Preradovica 1, 52100, Pula, Croatia

Abstract: The aim is to determine whether there is a correlation between trade and investment flows and their inter-causality on a group of Western Balkan countries (Croatia, Bosnia and Herzegovina, FYRoM and Serbia). The analysis in static model resulted in establishing complementarities between FDI inflows and exports and FDI inflows and imports into the countries of the region, which indicates that FDI inflows in this region are efficiency-seeking. Dynamic models have confirmed the traditional variables important for exports and imports (GDP host and home countries, distance, and lagged variables), but there were no links between trade and FDI. The relationship and intensity between trade and FDI is very weak which indicates that the current structure of FDI has not given the desired results in these countries.

Keywords: foreign direct investment; trade integration; Western Balkans; gravity equation; Croatia; Bosnia; Herzegovina; Serbia; FYRoM; former Yugoslavia; Yugoslav Republic; Macedonia; FDI inflows; Eastern Europe; exports; FDI inflows; imports; efficiency-seeking inflows; GDP; gross domestic product; host countries; home countries; distance; lagged variables; globalisation; global markets.

DOI: 10.1504/IJTGM.2011.042865

International Journal of Trade and Global Markets, 2011 Vol.4 No.4, pp.420 - 436

Received: 24 Feb 2011
Accepted: 11 May 2011

Published online: 08 Apr 2015 *

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