THE RELATIONSHIP BETWEEN FOREIGN DIRECT INVESTMENTS, EXPORTS AND ECONOMIC GROWTH

The main goal of this paper is to investigate the relationship between economic growth, foreign direct investment and exports on the example of the Republic of Croatia. Empirical analysis is based on the application of multiple empirical tests, including unit root tests, cointegration tests, and the Granger causality test. The results of most cointegration tests showed that there is no long-run balance relationship between the quarterly growth rate of real gross domestic product (GDP), the share of foreign direct investment series and exports of goods and services in real GDP. The conclusion about the lack of a long-run equilibrium relationship between the real GDP growth rate and the selected mentioned series is robust when time series are used at different frequencies, i.e. quarterly, in relation to annual time series. Based on Granger's causality test, the impact of the share of foreign direct investment on the real GDP growth rate has not been identified. On the other hand, in the case of the share of exports of goods and services in real GDR a causal relationship was identified between this share and the real GDP growth rate.