Economic growth determinants in old and new EU countries

Abstract

The aim of our paper was to construct a model of economic growth determinants for old and new EU and the EU28 countries. We used a strongly balanced panel in the period from 2000 to 2020 and regression equations. For the old EU group, our results showed a high level of statistical significance and a positive effect of gross fixed capital formation, trade openness, government consumption, and population on GDP growth during the observation period. In the new EU group, trade openness, political stability, and government consumption are significant and positively affect economic growth. When we included the moment of accession of new EU members in the analysis, our results showed that gross fixed capital formation, trade openness, political stability, and government consumption had a statistically significant and positive influence on the GDP growth rate. Interestingly, our results did not confirm the expected positive impact of foreign direct investments and renewable energy consumption on economic growth in our sample countries. We found that the crisis is statistically significant and negatively affected the GDP growth rate in both groups with a stronger impact in new EU countries. We conclude our article with policy implications and recommendations for future research.