Hrvatsko društvo ekonomista

ARTICLES ::: AUTHORS ::: ARTICLES SEARCH

October 2013. ::: Vol.64 No. 05

Tomislav Sekur

GRAVITY MODELING OF REGIONAL FDI DISPERSION Prethodno priopćenje Application of the Newton’s law of gravity is one of the most used tools for empirical examination of international trade ﬂows. The gravity formula can be also used in the case of FDI, which has become an important source of economic growth since the mid-20th century. In this paper, gravity approach will be applied for modeling FDI ﬂows between Croatia and main trading partners. Special emphasis will be laid upon CEFTA 2006 countries. Although Croatian CEFTA membership ended in July 2013 as Croatia joined the EU, this regional integration still remains the key element for strengthening Croatian investment position. Therefore, examination of regional patterns of Croatian FDI inﬂows and outﬂows will be a focal point of this paper. By using an OLS method, the analysis showed that Croatian FDI inﬂows generally suit the fundamental assumptions of the gravity model, whereas in the case of Croatian FDI outﬂows, the gravity formula does not work. Also, belonging to the CEFTA 2006 does not have any effect neither on the FDI inﬂows nor on the FDI outﬂows. Additional analysis has included offshore ﬁnancial centers (OFC) in order to examine in which way it affects Croatian FDI ﬂows. The results showed that FDI ﬂows in and from tax heavens are higher than gravity model assumes. gravity model; FDI; CEFTA 2006; offshore ﬁnancial centers; regional integration. Puni tekst: pdf (253 KB), Hrvatski, Str. 539 - 556

GRAVITY MODELING OF REGIONAL FDI DISPERSION

Prethodno priopćenje

Application of the Newton’s law of gravity is one of the most used tools for empirical examination of international trade ﬂows. The gravity formula can be also used in the case of FDI, which has become an important source of economic growth since the mid-20th century. In this paper, gravity approach will be applied for modeling FDI ﬂows between Croatia and main trading partners. Special emphasis will be laid upon CEFTA 2006 countries. Although Croatian CEFTA membership ended in July 2013 as Croatia joined the EU, this regional integration still remains the key element for strengthening Croatian investment position. Therefore, examination of regional patterns of Croatian FDI inﬂows and outﬂows will be a focal point of this paper. By using an OLS method, the analysis showed that Croatian FDI inﬂows generally suit the fundamental assumptions of the gravity model, whereas in the case of Croatian FDI outﬂows, the gravity formula does not work. Also, belonging to the CEFTA 2006 does not have any effect neither on the FDI inﬂows nor on the FDI outﬂows. Additional analysis has included offshore ﬁnancial centers (OFC) in order to examine in which way it affects Croatian FDI ﬂows. The results showed that FDI ﬂows in and from tax heavens are higher than gravity model assumes.

gravity model; FDI; CEFTA 2006; offshore ﬁnancial centers; regional integration.

Puni tekst: pdf (253 KB), Hrvatski, Str. 539 - 556