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Kamal Upadhyaya, Gyan Pradhan, Dharmendra Dhakal and Rabindra Bhandari
''Foreign Aid, FDI and Economic Growth in East European Countries''
( 2007, Vol. 6 No.13 )
This paper examines the effectiveness of foreign aid and foreign direct investment in the Czech Republic, Estonia, Hungary, Latvia, Lithuania and Poland. The model includes the labor force, capital stock, foreign aid and foreign direct investment, and is estimated using pooled annual time series data from 1993 to 2002. Before carrying out the estimation, the time series properties of the data are diagnosed and an error-correction model is developed and estimated using a fixed-effects estimator. The results indicate that an increase in the stock of domestic capital and inflow of foreign direct investment are significant factors that positively affect economic growth in these countries. Foreign aid did not seem to have any significant effect on real GDP.
JEL: F2 - International Factor Movements and International Business: General
C2 - Single Equation Models; Single Variables: General
Manuscript Received : Feb 23 2007 Manuscript Accepted : Apr 08 2007

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