Foreign and Domestic Growth Drivers in Eastern Europe

20 Pages Posted: 25 Nov 2010

See all articles by Enzo Weber

Enzo Weber

University of Regensburg; Government of the Federal Republic of Germany - Institute for Employment Research (IAB); Osteuropa-Institut (OEI)

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Date Written: July 1, 2010

Abstract

This paper analyses the growth effects of capital formation, exports and FDI as major drivers of economic development in Eastern Europe. The fundamental innovations are identified by empirically and theoretically motivated short- and long-run restrictions in structural cointegrated vector autoregressions. Impulse responses and variance decompositions reveal quite different growth effects in various Eastern European countries. Generally, strong reliance on exports goes along with higher GDP, and FDI bears substantial potential for fostering economic growth. It is shown that the recent worldwide recession clearly hit Eastern Europe through the export channel, whereas the recovery is mainly supported by positive demand shocks.

Keywords: Eastern Europe, Growth, Exports, Investment, Identification

JEL Classification: O11, C32

Suggested Citation

Weber, Enzo, Foreign and Domestic Growth Drivers in Eastern Europe (July 1, 2010). Available at SSRN: https://ssrn.com/abstract=1713706 or http://dx.doi.org/10.2139/ssrn.1713706

Enzo Weber (Contact Author)

University of Regensburg ( email )

93040 Regensburg
D-93040 Regensburg, 93053
Germany

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

Osteuropa-Institut (OEI) ( email )

Landshuter Str. 4
Regensburg, 93047
Germany

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