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  • Author or Editor: Aneta Kosztowniak x
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The paper analyses the impact of the factors of production on economic growth in Poland in the years 1992–2012, with particular focus on the impact of foreign direct investment (FDI), and strives to verify whether a causality relationship occurred between GDP and FDI, i.e. whether high GDP dynamics attracted FDI inflows and whether this investment contributed to GDP growth. The Vector Error Correction Method impulse responses and variance decomposition analysis confirmed the bi-directional relationships between FDI and GDP in Poland. However, the impact of GDP on attracting FDI inflows to Poland is stronger than that of FDI on GDP growth. Polish developmental policy should concentrate on three essential determinants (pillars) of growth, namely employment growth, attracting FDI (with emphasis on improvement in the type of inflowing investment), and increasing the value and productivity of domestic investment.

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Abstract

The aim of this paper is to diagnose the cause-and-effect relationships between reinvestment of earnings (RoE) and other components of FDI inflows and GDP in Poland in the years of 2004–2019, using the VECM model**. Changes in the structure of FDI inflows in Poland are in line with the stages of the FDI life cycle. The increase in the share of RoE in the structure of these investments is also accompanied by an increase in the impact and the degree of explanation of changes in GDP. Studies confirmed that changes in the structure of FDI in Poland was adequate to the theoretical cycle of FDI life. The increase in the share of RoE in the structure of FDI inflows is accompanied by a decrease in equities. The VECM model, impulse response function and decomposition analysis confirmed that among FDI components mainly equities, and next, RoE have large participation in the degree of explanation of GDP. In the short-term, mainly equity has the most important impact on GDP, and additionally, RoE. In the long-time, the importance of equity decreases, while increases the impact of RoE, and also, debt instruments. The increase in the share of RoE in the structure of FDI inflows accompanied by the increase in the impact of these investments on GDP changes.

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