ANALYSIS OF INVESTMENT FACTORS WHICH ARE INFLUENCING THE GROWTH OF THE REPUBLIC OF SERBIA

Ivan Milojević; Svetlana Ignjatijević; Dragomir Đorđević

doi:10.5937/ekoPolj1604205M

Authors

Ivan Milojevi?, Ph.D. University of defense in Belgrade, Military Academy
Svetlana Ignjatijevi?, Ph.D. Faculty of Economics and Engineering Management in Novi Sad
Dragomir ?or?evi?, Ph.D. Faculty of Economics and Engineering Management in Novi Sad

DOI:

https://doi.org/10.5937/ekoPolj1604205M

Keywords:

budget defcit, GDP, FDI, economic growth

Abstract

The subject of this research is empirical analysis of the factors which have influence on economic growth, whereas the main aim is to suggest adequate ways to overcome problems. We have analyzed the influence of budget defcit, personal consumption, inflation, real exchange rate, foreign trade balance and foreign direct investments (FDI) on economic growth. Furthermore, we measured the influence factors on the presence and movement of the budget defcit. Research paper uses the data obtained from the Statistical Offce of the Republic of Serbia, World Bank and the IMF for the time period 2001-2011 and has been applied regression analysis method. Research results indicate that the real exchange rate, personal consumption and foreign trade balance are statistically signifcant for anticipating economic growth developments. Contrary to our expectations, the empirical analysis showed that FDI have a negative influence on the economic growth. The coeffcient "public debt" is statistically signifcant and has a positive influence on the increase of budget defcit, whereas the increase of SDI and trade openness triggers a decrease in budget defcit. This research starts from the hypothesis that fnancing defcit limits economic growth and the inflow of FDI cant provide long-term economic growth. In the coming period Serbia needs to take advantage of the available resources and managing public fnances, obeying laws and regulations and continuing with reforms are fundamental for achieving a stable business environment.

Downloads

Download data is not yet available.

References

1. Ahmad, H., Millar, S. M. (2000): Crowding-out and crowding-in effects of the components of government expenditure, Contemporary Economic Policy, vol. 18, no. 1, pp. 124-133.
2. Aisen, A., Hauner, D. (2008): Budget Defcits and Interest Rates: A Fresh Perspective, IMF Working Papers, vol. 42, pp. 1-19.
3. Anderson, G., Ge, Y. (2004): Do Economic Reforms Accelerate Urban Growth? The Case of China, Urban Studies, vol. 41, no. 11, pp. 2197–2210.
4. Bahmani, O.M. (1999): Do federal budget defcits crowd out or crowd in private investment?, Journal of Policy Modeling, vol. 21, no. 5, pp. 633-640.
5. Barro, R.J. (1979): On the Determination of the Public Debt, Journal of Political Economy, vol. 87, pp. 940- 971.
6. Cannonier, C., Francis, B., Lorde, T. (2007): Foreign Direct Investment and Trade in the Eastern Caribbean Currency Union, Journal Of Eastern Caribbean Studies, vol. 32, no. 3, pp. 23-49.
7. Cebula, R., Mixon, F. (2012): The Impact of Fiscal and Other Economic Freedoms on Economic Growth: An Empirical Analysis, International Advances in Economic Research, vol. 18, no. 2, pp. 139-149.
8. Daly, V., Siddiki, J.U. (2009): The twin defcits in OECD countries: co-integration analysis with regime shifts, Applied Economics Letters, vol. 16, no. 11, pp. 1155- 1164.
9. David, N. (2009): Effciency aspects of increasing inheritance taxes while decreasing income taxes, Applied Economics, vol. 41, no. 26, pp. 3359-3366.
10. Demir, M., Sever, E. (2008): Kamu iç borçlanmasinin büyüme, faiz ve enflasyon orani üzerindeki etkileri, Electronic Journal of Social Sciences, vol. 7, no. 25, pp. 170-196.
11. Despotović, D., Veličković, D., Ristić, J. (2011): Budžetski defcit i privredni rast - teorijske kontroverze, Ekonomika, vol. 57, no. 2), pp. 146-157.
12. Đorđević, D., Ignjatijević, S. (2013): Javne fnansije, Novi Sad: Fakultet za ekonomiju i inženjerski menadžment.
13. Fatima, G., Ahmed, M., Ur Rehman, W. (2012): Consequential Effects of Budget Defcit on Economic Growth of Pakistan, International Journal of Business & Social Science, vol. 3, no. 7, pp. 203-208.
14. Flexner, N. (2000): Foreign direct investment and economic growth in Bolivia, 1990-1998. Economic Policy Division, Central Bank of Bolivia, La Paz–Bolivia. http://econwpa.wustl.du/eps/mac/papers/0309/0309009.pdf.
15. Galjak, I., Bošković, Č. (2015): Istorijski aspekti razvoja tržišta kapitala I korporativnog upravljanja, Oditor, Beograd, no. 10, pp. 10-16.
16. Ghali, K.H., Al-Shamsi, F. (1997): Fiscal policy and economic growth: a study relating to the United Arab Emirates, Economia Internazionale / International Economics, vol. 50, no. 4, pp. 519-533.
17. Globerman, S., Shapiro, D. (2002): Governance infrastructure and US foreign direct investment, Journal of International Business Studies, vol. 34, no. 1, pp. 19-39.
18. Gorčić, J. (1994): Finansije i fnansijsko pravo, Beograd: Radnička štampa.
19. Huynh, N.D. (2007): Budget Defcit and Economic Growth in Developing
Countries: The case of Vietnam, Kansai Institute for Social and Economiic Research (KISER).
20. Ignjatijević, S. (2011): Effect of gross domestic product and income of personal consumption, Ekonomija: teorija i praksa, vol. 4, no. 1, pp. 105-110.
21. Jelčić, B. (1990): Nauka o fnansijama I fnansijsko pravo, Zagreb: Narodne novine.
22. Krstić, S. (2016): Značaj institucije centralne banke za nacionalnu ekonomiju, Oditor, Belgrade, Serbia, vol. 2, no. 2, pp. 18-26.
23. Kolstad, I., Villanger, E. (2004): Determinants of Foreign Direct Investments in Services, CMI Working Paper, WP 2.
24. Komazec, S., Ristić, Ž. (2009) Makroekonomija, Beograd: Etnostil.
25. Lensink, R., Morrissey, O. (2001): Foreign direct investment: flows, volatility and growth in developing countries, University of Groningen.
26. Safdari, M., Mehrizi, M., Elahi, M. (2011): The Effect of Budget Defcit on Private Consumption in Iran, American Journal of Scientifc Research, vol. 39, pp. 40-46.
27. Raičević, B., Ignjatijević, S., Milojević, I. (2016): Finansijska analiza uticaja stranih direktnih investicija na ekonomski rast zemalja u razvoju, Ekonomika poljoprivrede, vol. 63, no. 2, pp. 649-663.
28. Rosić, I. (2003): Nacionalna makroekonomija, Kragujevac: Ekonomski fakultet.
29. Saad, W., Kalakech, K. (2009): The Impact of Budget Defcits on Money Demand: Evidence from Lebanon, Middle Eastern Finance and Economics, vol. 3, pp. 65- 76.
30. Saleh, A.S. (2003): The Budget Defcit and Economic Performance: A Survey, Working Paper Series, WP03-12, School of Economics and Information System, University of Wollongong, Australia.
31. Sill, K. (2005): Do budget defcits cause inflation?. Business Review, Q3, pp. 26-33.
32. Tekin-Koru, A., Özmen, E. (2003): Budget defcits, money growth and inflation: the Turkish evidence, Applied Economics, vol. 35, no. 5, p. 591.
33. Tian, X., Lin, S., Lo, V.I. (2004): Foreign Direct Investment and economic performance in transition economies: Evidence from China, Post-Communist Economies, vol. 16, no. 4, pp. 497-510.
34. Vukša, S., Anđelić, D., Kolarski, I. (2015): Uloga ekonomske politike u ekonomskim krizama, Oditor, Beograd, no. 12, pp. 4-12.