Impact of FDI on Welfare in Transition Economies: A System-Generalized Method of Moments Analysis

Abstract

The purpose of our research is to conduct a detailed analysis of the main determinants of the impact of FDI on welfare in host countries in transition. Our work is intended to contribute theoretically to the introduction of new hypotheses, which should allow for a better identification of the factors determining the impact of FDI on welfare in transition countries, and empirically to the improvement, identification, and more accurate measurement of the externalities produced by FDI. From a practical perspective, our analysis has a dual importance: firstly, it further guides research on welfare in transition countries and, secondly, it supports the theories that FDI is an essential source of complementary financing for these countries, so that the results of our study can serve as a tool to support government public policies.