Determinants of gross domestic product (GDP) growth with a focus on inward foreign direct investment (FDI): a comparative analysis of bailed-out countries in the aftermath of the European debt crisis (Greece, Ireland and Portugal)
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School of Business |
Bachelor's thesis
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Authors
Date
2017
Department
Mikkelin kampus
Major/Subject
Mcode
Degree programme
(Mikkeli) Bachelor’s Program in International Business
Language
en
Pages
41
Series
Abstract
Objectives The main objectives of this study were: 1) to understand GDP and its components; 2) to identify some of the main variables affecting its performance; 3) to understand FDI and its economic role in the host country; 4) to gauge inward FDI impacts on GDP; 4) to compare the economies of Greece, Ireland and Portugal after 2008, in order to identify determinants of economic success; 5) to propose areas on which macroeconomic policies should focus. Summary This thesis looked into the literature to find variables most commonly connected to GDP performance. Then, the GDPs of Greece, Ireland and Portugal were broken into their components (gross capital formation, total consumption and net exports) to assess which ones were affected in the aftermath of the European Debt Crisis. Next, the impacts of the chosen variables were discussed, with special attention to inward FDI. Conclusions Restrictions to the access to credit affected gross capital formation (GCF) and exports in Greece. Combined with high unemployment rates, these facts were decisive for the Greek economic underperformance. FDI inflows never played a significant role. In Ireland, economic boom was led by the great performance of its exports. FDI inflows might have affected it, but no conclusion was reached. Portugal had an average GDP performance and average indicators of GCF, export performance, labor productivity, innovation, business environment and unemployment. Its highest FDI inflows concurred with the worst performance of its GDP.Description
Thesis advisor
Rannikko, HeikkiKeywords
gross domestic product (GDP), foreign direct investment (FDI), gross capital formation (GCF), balance of trade (BOT), exports, comparative analysis, Greece, Ireland