The long term contribution of FDI and other interrelated factors to growth

Abstract

By the end of WWII Foreign Direct Investments gained an important role in the International Economy. It is a real fact that FDI-related studies have contributed to the better understanding of the economic development. At the same time they are a part of the process of integrating many countries into the capitalistic system as they are a capital flow mechanism in the economy. The aim of the present Master thesis is to analyze FDI at a theoretical level, also to study their effects on GDP. In the meanwhile, other variables are included in the model such as the financial sector, imports and exports. Afterwards, it used ARDL method to study the causative effect from the independent variables to the dependent one, more detailed conclusions are drawn for each country and finally the case of the basic model with GDP dependent variable is observed with the use of Wald test if the dependent variables are thought to be important for the model. Is GDP affected by FDI and the rest of the variables long-term and in the short –term? And how do GDP affected and are affected by rest them?