The impact of value added components of GDP and FDI on economic freedom in Europe

Date

2018-06-01

Author

SAYARI MARCUM, NAZ
Sarı, Ramazan
Hammoudeh, Shawkat

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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.

Subject Keywords

Economics and Econometrics

URI

https://hdl.handle.net/11511/41945

Journal

ECONOMIC SYSTEMS

DOI

https://doi.org/10.1016/j.ecosys.2017.03.003

Collections

Department of Business Administration, Article

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Citation Formats

N. SAYARI MARCUM, R. Sarı, and S. Hammoudeh, “The impact of value added components of GDP and FDI on economic freedom in Europe,” ECONOMIC SYSTEMS, pp. 282–294, 2018, Accessed: 00, 2020. [Online]. Available: https://hdl.handle.net/11511/41945.