THE EVALUATION OF THE IMPACT OF FOREIGN DIRECT INVESTMENT ON LITHUANIAN ECONOMY USING LAG-ANALYSIS

Aiste Kuliaviene, Jolanta Solnyskiniene

Abstract


Purpose - to determine the particular impact of Foreign Direct Investment (FDI) on the Lithuanian Gross Domestic Product (GDP) through economic activities using lag-analysis, which allows to evaluate the impact on the particular period of time.

Methodology. The most important aspect for the host country is how quickly FDI starts to affect country‘s economy as the impact of FDI occurs after a certain period of time (lag) following the investment actions. There are used the lag determination, statistical clustering and visualization methods.While using these methods there were investigated and were pointed out Lithuanian economic activities which have a significant value in attracting FDI.

Results. There was identified the optimum size of lag (certain period of time). Furthermore, there were presented the estimation and the proposals what the government should focus on, on wchi economic activity as one of the most economically perspective. The research showed that the impact of FDI was likely to occur rapidly in energetic sector despite the fact that many other sectors are subsidised by the government.

Practical implications - the issue of Foreign Direct Investment impact is one of the most urgent, tas it is believed to enable the country to attract foreign capital and it allow to increase the country's economic growth technological and political development of the country. There had been done many studies analysing the impact of Foreign Direct Investment on the country's economy and particularly on Gross Domestic Product (GDP). Such studies were made by Alfaro (2003), Blonningen and et all (2006), Johnson (2006), Kornecki (2007), Qaiser and et all (2011) and by many other scientists.

Value/originality. Usually scientists use just correlation-regression analysis to evaluate a certain impact but there hadn’t been done any research in Lithuania analysing FDI impact using not only correlation-regression but also lag-analysis method. Due to that, there was created the model showing when the certain impact of FDI started to influence country’s GDP.This research not only revealed a new study of economical- statistical approach but also distinguished the most useful economic activity for the creation of the country‘s economic welfare.

DOI: http://dx.doi.org/10.5755/j01.em.19.1.5597


Keywords


Foreign Direct Investment; lag analysis; impact; gross domestic product

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Print ISSN: 1822-6515
Online ISSN: 2029-9338