Journal article
The impact of value added components of GDP and FDI on economic freedom in Europe
Economic systems, v 42(2), pp 282-294
Jun 2018
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
•Growth in the industrial and service sector positively affects economic freedom.•Growth in the agricultural sector decreases economic freedom.•Marginally significant evidence is found for a relationship between FDI and economic freedom.•The impact of GDP growth and FDI on economic freedom is fairly consistent among CEECs and Western European countries.
This paper investigates the possibility of a long-run relationship between the Economic Freedom Index (EFI), Foreign Direct Investment (FDI) and value added components of GDP in thirty Eastern, Central and Western European countries. The study further examines whether the FDI and sector-specific components of GDP have any significant impact on economic freedom for these countries. We use annual data and employ Pedroni and KAO panel cointegration analyses to assess the long-run relationships. The results indicate that there is a significant long-run relationship between the variables under study. Moreover, the evidence shows that the service and industry value added components positively affect EFI, while the agriculture value added component has a negative effect on EFI. However, contrary to the prior literature, we observe a marginally significant and negative relationship between EFI and FDI in the random effects model.
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Details
- Title
- The impact of value added components of GDP and FDI on economic freedom in Europe
- Creators
- Naz Sayari - Middle East Technical UniversityRamazan Sari - Middle East Technical UniversityShawkat Hammoudeh - Drexel University
- Publication Details
- Economic systems, v 42(2), pp 282-294
- Publisher
- Elsevier
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:000437385500007
- Scopus ID
- 2-s2.0-85042306198
- Other Identifier
- 991019167992404721
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Economics