Abstract
This study aims to investigate the impact of savings and foreign direct investment on economic growth in Poland. Savings play an important role in achieving sustainable growth. High saving rates are also an important tool to increase resilience to financial shocks. The economic climate that emerged following the financial crisis revealed problems with the economy of Poland to obtain foreign financing. The decrease in foreign direct investment has led to an unpredictable economic environment for developing countries such as Poland. The decrease in foreign direct investment has led to lower growth rates for an emerging market such as the economy of Poland. The relationship economic growth rate, saving and foreign direct investment are examined for Poland over the period 1992-2016 by using the Autoregressive Distributed Lag (ARDL) bounds testing approach. According to this approach there is a cointegration relationship between the series and a 1% increase in savings which leads to a 0.81% increase on economic growth rate. Also a 1% increase in foreign direct investment (FDI) leads to a 1.52% increase in the economic growth rate.
Highlights
Savings are one of the main drivers of economic growth and are critical to financing investment and achieving growth targets
The main aim of this study is to examine the relationship between the economic growth rate, saving and foreign direct investment for Poland over the period 1992-2016 by using the Autoregressive Distributed Lag (ARDL) bounds testing approach
In addition to this a 1% increase in foreign direct investment (FDI) leads to a 1.52 % increase in the economic growth rate
Summary
Savings are one of the main drivers of economic growth and are critical to financing investment and achieving growth targets. Growth levels achieved through domestic savings are more sustainable than growth rates obtained with capital borrowed. In developing countries the lack of domestic savings and the difficulty of foreign borrowing increase the importance of foreign direct investments. This study aims to reveal the effectiveness of foreign direct investments and savings in the Polish economy which have a significant impact on economic growth. High domestic savings will help the Polish economy to finance its investments and achieve sustainable economic growth rates. In this study the relationship between economic growth, savings, and foreign direct investment is considered for the Polish economy for the period 1992-2016. This study is important in terms of the impact of foreign investment and savings on growth in countries like Poland which needed external financing after the global crisis. The conclusions of this paper are summarized in the last Section
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