International Trade and Foreign Direct Investment as Growth Stimulators in Transition Economies: Does the Impact of Institutional Factors Matter?

Antonis Tsitouras, Athanasios Koulakiotis, Georgios Makris and Harry Papapanagos (2017). International trade and foreign direct investment as growth stimulators in transition economies: does the impact of institutional factors matter?. Investment Management and Financial Innovations (open-access)

23 Pages Posted: 2 Jan 2018

See all articles by Antonis Tsitouras

Antonis Tsitouras

University of Macedonia

Athanasios Dimitrios Koulakiotis

University of the Aegean, Department of Financial and Management Engineering

Georgios Makris

University of Macedonia

Harry Papapanagos

University of Macedeonia in Thessaloniki - Dept. of Balkan - Slavic & Oriental Studies

Date Written: December 23, 2017

Abstract

The present paper develops a general production function framework, augmented with two institutional variables namely, bureaucracy and corruption, on 28 transition economies over the period 2000 to 2015. We use various econometric specifications and apply both the Fixed Effects as well as the advanced system Generalized Method of Moments (GMM) panel data techniques. Empirical findings suggest that the impact of openness in terms of foreign direct investment and international trade is advantageous to all the economies of the panel. Furthermore, the findings indicate that classical growth determinants, such as labor and physical capital, have the expected positive contribution, while macroeconomic instability has a negative effect on real economic activity. Regarding the impact of the two institutional variables, corruption, and bureaucracy, we retrieve more influential results, as their impact appears to be diametrically opposite between the Former Soviet Union States and the rest of European transition countries.

Keywords: FDI, institutions, GDP, transition economies, panel data analysis, Generalized Method of Moments (GMM)

JEL Classification: E22, F21, O43, C33, C36

Suggested Citation

Tsitouras, Antonis and Koulakiotis, Athanasios Dimitrios and Makris, Georgios and Papapanagos, Harry, International Trade and Foreign Direct Investment as Growth Stimulators in Transition Economies: Does the Impact of Institutional Factors Matter? (December 23, 2017). Antonis Tsitouras, Athanasios Koulakiotis, Georgios Makris and Harry Papapanagos (2017). International trade and foreign direct investment as growth stimulators in transition economies: does the impact of institutional factors matter?. Investment Management and Financial Innovations (open-access), Available at SSRN: https://ssrn.com/abstract=3093067

Antonis Tsitouras (Contact Author)

University of Macedonia ( email )

156 Egnatia St.
P.O. 1591
Thessaloniki, 54006
Greece

Athanasios Dimitrios Koulakiotis

University of the Aegean, Department of Financial and Management Engineering ( email )

31 Fostini Str
Chios, GR 82 100
Greece

Georgios Makris

University of Macedonia ( email )

156 Egnatia St.
P.O. 1591
Thessaloniki, 54006
Greece

Harry Papapanagos

University of Macedeonia in Thessaloniki - Dept. of Balkan - Slavic & Oriental Studies

156 Egnatia St.
P.O. 1591
Thessaloniki, 54006
Greece
+30 2310 891471 (Phone)
+30 2310 891377 (Fax)

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