The Impact of FDI over Economic Growth and how COVID-19 Crisis Can Impact the CEE Economies

Abstract

The purpose if this study was to analyse the impact of FDI inflows on GDP growth and to present if the COVID-19 crisis can impact the CEE economies growth perspective even more than in the current situation. The study confirms that attracting foreign capital is beneficial for an economy, despite the views considering that they may affect the local market. The emergence of foreign companies helps the host country to develop on several levels: the adoption of new technologies and managerial ideas involving human capital, the flows of foreign capital bringing economic benefits, the banking activity development in order to support the financing required by market, governments being forced to adjust legislative measures, and foreign trade being improved. We used a panel data regression model on CEE economies that showed that FDI inflows is highly positively correlated to GDP growth. The results present that all CEE countries can face a higher level of contraction do to the decrease in FDI inflows.

Keywords

• fdi
• covid-19
• cee economies
• fiscal policies