Comparative analysis of economic growth determinants in Romania and Central and Eastern European countries

Abstract

Abstract Economic growth is one of the most studied topics in the literature in the field due to its significant role in the development of each country. Studies divide economic determinants into two categories based on their influence on economic growth: endogenous and exogenous. The study aims to estimate economic growth against two types of determinants for Romania and Central and Eastern European countries using data for 1995-2017 in order to compare the two cases. For Romania, we used time series specific methods (e.g. stationarity checking using Augmented Dickey-Fuller test, OLS model). In case of Central and Eastern European countries, we employed methods specific for panel data (e.g. estimation of the OLS general model, fixed effects model, random effects model, and feasible generalized least squares model). The results showed that in Romania, in the studied period, only the exogenous determinants (e.g. high technology exports) have a significant influence on economic growth, while Central and Eastern European countries were influenced by both types of determinants (e.g. life expectancy, foreign direct investments). In case of Romania, foreign direct investment did not represent a significant determinant for economic growth during 1995-2017 due to slower transition from communist regime to market economy.