The Mediator Effect of Foreign Direct Investments on the Relation between Logistics Performance and Economic Growth

Abstract

Economic growth is a process of enhancement in total production level measured by absolute and relative increases or real production per capita. Economic growth is also related with development of production capacity. Recent researches consider Gross Domestic Product (GDP) as one of the indicators of growth. Logistics Performance Index (LPI) issued by World Bank is an indicator of logistics performance of a country consisting of six dimensions. Foreign Direct Investments involve establishing operations or acquiring tangible assets by a foreign firm for doing businesses in other country. In order to indicate the importance of logistics performance and capabilities, the paper investigates the mediator effect of Foreign Direct Investment (FDI) on the relation between Logistics Performance and Economic Growth. Research model is used to test above relationships through hierarchical regression method. As a result of analyses conducted, the mediator effect of FDI on the relation between LPI and GDP is found as statistically significant.

Keywords: Logistics, Gross Domestic Product, Foreign Direct Investment