Acta Universitatis Danubius. Œconomica, Vol 10, No 4 (2014)

Foreign Direct Investment Environment and Economic Growth

Nakije myftar Kida


This paper examines the models of economic growth and the dynamic interaction between models from the Solow Model to New Endogenous Models. Long-term relationship of these models is noticed to have been related in terms of causality. Model comparisons were made to examine their dynamics which is not as complex as reflected. Results that growth is led by endogenous or exogenous factors are not verified to be absolute but relative. Results indicate that FDI affect the economic growth in many developing countries, but there are also many cases (developed countries) that show that economic growth has led to a long term increase of FDI flow. It is also verified that the impact of FDI on the environment is relative, based on the fact that there are exogenous factors that may affect the reduction of externalities. Causal link among FDI, economic growth and their impact on the environment makes the endogenous models be analysed with the dynamics, through which is shown best which is the “cause-consequence” factor, that causes ​​gaps of concepts and practices in economic growth and environmental concerns.


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