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This paper contains an empirical assessment of the growth effects of foreign direct investment (FDI) in European Union (EU) countries, when controlling for other growth determinants. Using data over the period 1980-1996, we obtained estimates of the growth effects of FDI for each country in isolation and by pooling the data for the whole Union. Country-specific estimates suggest that growth determinants vary across EU members and that only past FDI inflows have a significant effect on growth. Interestingly, when data are pooled, the empirical results show that FDI has a positive effect on the growth rate of EU economies both directly and indirectly (through trade reinforcement). Also, unlike previous empirical findings concerning developing economies, we obtained evidence that the growth effect of FDI is not conditional upon the level of human capital in developed host countries.

This study attempts to address the causal-order between inward FDI and economic growth using a panel data set for two different Economic Associations that is EU (European Union) and ASEAN (Association of South Eastern Asian Nations) over the period 1970-2003. The inflows of FDI to developed host countries raise the question of how these inflows affect their economies and what is the interaction between FDI and growth. While there is considerable evidence on the link between FDI and Economic Growth , the causality between them has not been investigated in a reasonable procedure. Three possible cases are investigated in this paper 1) Growth-driven FDI, is the case when the growth of the host country attracts FDI 2) FDI-led growth , is the case when the FDI improves the rate of growth of the host country and 3) the two way causal link between them. Empirical results obtained from heterogeneous panel analysis indicate the following. Regarding the EU countries the results support the hypothesis of GDP-FDI causality (growth driven FDI) in the panel. Regarding the ASEAN, there is a two-way causality between GDP per capita and FDI like the cases of Indonesia and Thailand. In the cases of Singapore and the Philippines, howerver, FDI is motirated by host country's. GDP growth. So, the

The aim of this paper is to investigate the determinants of business cycle (BC) synchronization across 21 (old and new) countries of the enlarged European Union (EU). It utilizes international data to evaluate the linkages among bilateral trade in goods, bilateral foreign direct investment (FDI) flows and BC co-movements. The paper contributes to the current literature by examining the relationship using the latest available data (sample range: 1998-2011), and thus taking into account the European sovereign debt crisis period. It also examines the role of FDI, which though increasingly important in the flows of international production factors, is currently neglected by the literature. Preliminary results show that FDI has no direct effect on BC synchronization while international trade helps to synchronize BCs but only before the recent financial crisis (pre-2008) and only for the traditional EU countries.

The aim of this study is to investigate whether the level of financial development can make a significant contribution to the Foreign Direct Investment's (FDI) positive impact on economic growth. In other words, to examine whether the contribution of FDI on growth is relatively more important in countries with well-developed financial markets compared to those with the less-developed ones. The time period of the empirical research spans from 1988-2009, using yearly macroeconomic data for a sample of 73 developing countries. Our empirical methodology consists of panel-growth regressions. Our results suggest that the FDI make substantial contribution to growth where financial systems function effectively, such as high-income countries, while the FDI impact is found to be insignificant in cases where relatively weaker financial systems exist.