Subject: : foreign direct investment; Technological Industrial Development Zones (TIRZ); economic and institutional variables; Vector Error Correction Model; Republic of Macedonia
Year: 2018
Type: Article
Title: Vector Error Correction Model on FDI and their Impact in the Republic of Macedonia
Author: Kikerkova, Irena, Naumovska Elena, Toshevska-Trpchevska, Katerina, Makrevska Disoska Elena
Abstract: The subject of this paper is the foreign direct investment inflow in Macedonia and its impact upon the economic growth and development of the country. Its basic purpose is to analyse the interconnection of foreign direct investments with a number of economic, political and institutional variables in Macedonia. In the paper we provide theoretical overview on relevant literature on FDI and present the actual legal framework on FDI in Macedonia. A special emphasis is given to the Law on Technological Industrial Development Zones and to various incentives provided for foreign investors in the economy. In the paper are presented relevant statistical data on foreign direct investment inflows, their origin by greatest foreign investors and their sector distribution in Macedonia. We also compare the available statistical data on FDI inflows in the rest of the Western Balkan countries. The main contribution of the paper is the application of VECM (Vector Error Correction Model) on foreign direct investment impact upon the economy. By this econometric estimation, the FDI indicator is calculated as a function of certain fundamental economic variables (GDP, unemployment rate, openness to trade, trade balance, bank credit activity, etc.) as well as of Worldwide Governance Indicators (control of corruption, government effectiveness, political stability, regulatory quality and rule of law). Results obtained by the econometric model should provide relevant conclusions on the impact of the up-to-date FDI inflow upon the growth and development of the Macedonian economy.
Publisher: Faculty of Economics and Business, University of Zagreb and De Gruyter Open
Relation: Zagreb International Review of Economics and Business, Vol. 21, No.2
Identifier: oai:repository.ukim.mk:20.500.12188/18039
Identifier: Kikerkova, I., Naumovska E., Toshevska-Trpchevska, K., Makrevska Disoska E., (2018), “Vector Error Correction Model on FDI and their Impact in the Republic of Macedonia”, Zagreb International Review of Economics and Business, Vol. 21, No.2, Faculty of Economics and Business, University of Zagreb and De Gruyter Open, ISSN: 1331-5609, UDC: 33+65, DOI: 10.2478/zireb-2018-0012
Identifier: http://hdl.handle.net/20.500.12188/18039Identifier: 10.2478/zireb-2018-0012
