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Institute of Public Finance

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Impact of foreign direct investment on Croatian manufacturing exports

Goran Vukšić, Institute of Public Finance, Zagreb, Croatia

The exports of Croatian manufacturing industry have been stagnating over the last decade or so. Over the same period there have been relatively high inflows of foreign direct investment (FDI) into industry. The aim of this paper is to examine, after controlling for other potentially significant variables, whether these inflows have had an impact on export performance. Using the panel data approach for 21 manufacturing industry sectors over the period between 1996 and 2002, it is found that FDI has positively and significantly affected exports, but the extent of this impact was relatively low. This implies that there is a potential for improving the export performance of Croatian manufacturing industry by attracting more FDI into this sector. Policy makers should try to enhance the potential positive effects of FDI by targeting specific export-oriented greenfield foreign investment, and, in addition, implement measures to increase potential spillover effects.

Keywords:  foreign direct investment, exports, models with panel data, Croatia

Year:  2005   |   Volume:  29   |   Issue:  2   |   Pages:  131 - 158

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 March, 2005
II / 2005
EBSCO Publishing
ISSN 1846-887X
e-ISSN 1845-9757
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