Determinants of economic growth in V4 countries and Romania

Abstract

The middle and long-term slowdown in growth dynamics could bring serious social and political problems for V4 countries (Czech Republic, Slovak Republic, Hungary, Poland) and Romania. It would threaten reaching benefits from potential of convergence process with the developed countries of the European Union. As a result, the V4 economies and Romania should find solutions to achieving a sustainable growth that is associated with an improvement of their international competitiveness. This paper provides an empirical analysis of factors that might determine a stable economic growth in the five mentioned countries. The empirical analysis conducted for the period of 2003-2016 employed Bayesian generalized ridge regression. The main results indicated that the FDI promoted economic growth in all countries, except the Slovak Republic. Only in the Czech Republic, the expenditure on education generated economic growth, while the expenditure on R&D had positive effects in Romania, Hungary and the Czech Republic.