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The aim of this paper is to investigate the impact of foreign direct investment (FDI) on economic growth in the transition countries of southeast Europe. The empirical analysis embraces seven southeast European countries in the period 1998-2007. The authors use Prais-Winsten regression with panel-corrected standard errors for the preferred estimation model. The main research result is the positive and statistically significant effect of FDI on economic growth. The impact of FDI is statistically significant and robust when including data on domestic investments. The results are robust to considering endogeneity issues (i.e., inverse causality).
Mehić et al. (Tue,) studied this question.