S/E/69. Dissertation. The relationship between Foreign Direct Investment (FDI) and Economic Growth with reference to Czech Republic

Foreign Direct Investment (FDI) has increased rapidly over the last years, especially after the promotion of the International Monetary Fund (IMF) and World Bank. This dissertation evolves around the Czech Republic and what FDI has for impact on the Economic growth. Especially in reference to Technology and productivity spillovers FDI has on economic growth. For a general understanding of FDI in relation to economic growth, determinants can be used to evaluate the effect. Literature shows how technology and productivity spillovers, employment creation, capital accumulation, and export promotion relate to FDI. Other determinants of growth are human capital, government expenditure, population size and openness. This study focuses especially on two hypotheses, in the form of a case study. First hypothesis is about the technological and productivity spillover from FDI lead to an increase in economic growth in the Czech Republic. The second hypothesis discussed about the Czech government that can be an extra incentive for economic growth. Formulas show different solutions to different questions in economic growth. The research discusses the Keynes’ GDP model, the Purchasing Power Parity (PPP), as well as Solow’s Total Factor Productivity (TFP) and Multi Factor Productivity (MFP), and Cob-Douglas elastic growth equation, that includes technology development into the equation.