Is there a Positive Influence of Foreign Direct Investment on the Economies of OECD Countries? Empirical Evidence on Countries within the European Area

Abstract

In the last years, most of the empirical results presented in the international literature are highlighting a positive impact of foreign direct investment on economic growth. This econometric study is taking into account evidence from the Organisation for Economic Co-operation and Development countries within the European area, the main focus being the economic crisis and the pandemic crisis during the most recent years. The research methodology is based on the Panel Least Squares regression, VAR model and Granger causality test, which proved that the foreign direct investment has a positive impact on economic growth, but not so strong, and the causal relationship is unidirectional from foreign direct investment to economic growth. The results of the study are aligned with the literature review showing a positive influence of foreign direct investment on the economies of OECD countries and are useful in terms of investing decisions and macroeconomic policies.