Whether globalization in form of FDI enhances national wealth: Empirical evidence from Lithuania

Abstract

Presented paper aims to suggest theoretical framework, application of which would allow indicating if foreign direct investment (FDI) facilitates or hinders economic development of host country economy. Central ideas elaborated in the article are as follows. The first, necessity of cost‐benefit analysis of FDI inflow is emphasized. As state policy favourable for foreign capital means costs, instrument for benefit estimation is required. Neoclassical and industrial organization theories are being employed for FDI effects evaluation purpose. Assumption about changing effect of FDI after medium‐term period of 6–7 year passes has been raised and tested. Data of Lithuanian manufacturing branch and its three main comprising manufacturing sectors for the 1996–2007 period have been employed. Results of application of elaborated theoretical framework lead to corollary about different impact of FDI on various sectors of economy and high probability of diminishing positive initial impact after medium‐term time span passes.

Santrauka

Straipsnyje siūlomas originalus, teoriškai pagristas modelis, skirtas nustatyti, kaip laikui begant kinta tiesioginiu užsienio investiciju (TUI) poveikis šalies šeimininkes ekonominiam vystymuisi. Autoriai, vertindami TUI poveiki, taiko sanaudu ir naudos analizes principa. Kadangi valstybes politika, palanki užsienio investicijoms, dažniausia reiškia šalies sanaudas joms pritraukti, kyla ekonominiu instrumen‐tu, reikalingu TUI ekonominiam naudingumui ivertinti, sukūrimo problema. Jai spresti pasitelkiamos neoklasikine ir industrines organizacijos teorijos. Straipsnyje iškeliama ir tikrinama prielaida, kad TUI poveikis šalies šeimininkes ekonominiam vystymuisi pakinta po TUI atejimo praejus vidutiniam, t. y. 5–6 metu, laikotarpiui. Tirti naudojami 1996–2007 m. laikotarpio Lietuvos trijupagrindiniupramones sektoriu duomenys. Sukurto modelio taikymo rezultatai leidžia atskleisti nevienoda TUI poveiki skir‐tingiems ekonomikos sektoriams bei leidžia teigti, jog pradinis teigiamas TUI poveikis vietines ekono‐mikos vystymuisi turi tendencija mažeti po investavimo praejus 5–6 metams.

Keywords:

• FDI
• economic growth
• Lithuania
• theoretical framework

Reikšminiai žodžiai:

• TUI
• ekonominis augimas
• Lietuva
• teorinis modelis