Heri Bezić

Tourism Foreign Direct Investment Led Tourism Gross Value Added: A Co-Integration and Causality Analysis of Croatian Tourism

Abstract The purpose of this study was to investigate the causal relationship between foreign direct investment in tourism and tourism gross value added in Croatia. The study employed econometric techniques, such as the unit root test, Johansen co-integration, and the Granger causality test, in a vector error correction model (V.E.C. model), and the Toda–Yamamoto causality test in a vector autoregressive model (V.A.R. model), using quarterly time-series data from 2000(1) to 2012(4). The results confirm the existence of a stable co-integrated relationship between variables in the long term. A short-term relationship was also proved between foreign direct investment in tourism and gross value added, using the Toda–Yamamoto causality test. By including control variables, the two-way causality between the subject variables was proven using the Granger causality test.

ECONOMIC STRUCTURE AND REGIONAL ECONOMIC PERFORMANCE IN ADVANCED EU ECONOMIES

Abstract Recent economic turmoil has revived interest in the quest for sustainable growth. Current economic thinking attaches growing importance to industrial development. The roots of such thinking can be traced back to traditional arguments about the beneficial role of manufacturing for economic growth through horizontal and vertical spillovers to other sectors. These spillovers are of particular importance at the regional level, as such externalities tend to be localized in nature. The objective of this paper is to explore the relationship between economic structure and regional growth in ten Western European EU member states in the post-crisis period. The analysis wishes to answer the question of whether regions with a higher concentration of manufacturing outperform their counterparts with more diverse economic structures. A spatial panel econometric technique is applied in order to distinguish between the intra-regional and inter-regional effects of economic structure, yielding recommendations for policy makers in the field of industrial policy.

The Tax and Inflow of FDI

The article examines the impact of corporate tax rates on inflow of foreign direct investments. In the last 15 years the countries all over the world have adopted numerous measures in order to attract more foreign capital. One of the most common measures has been the reduction in the corporate tax rates. Although useful article shows that taken in isolation this measure has not had a significant impact on investment decision taken by the foreign investors. Macroeconomic stability, stable social and political environment, ease of doing business and ability to hire skilled labour influence investment decisions much more then the level of corporate tax rates. Croatia has also louvered its corporate tax rate from 35% to 20% in 2001. Judging from the available data that has not had any impact on inflow of FDI. In order to attract more greenfield investment Croatia will have to sort out some domestic issues and to organise more effective targeting of the largest multinational companies.

EU and Croatia: Attractiveness of Business Environment

Focus of interest in this paper is the concept of competitiveness as measured by the originally developed index of business environment. Competitiveness is interpreted in the broader meaning of the term: it includes not only cost conditions, but also institutional and system conditions of different national economies that define the attractiveness of their business environment. Methodology of composite index decomposition and analysis is used to evaluate and compare Croatian results with the results of EU15 and EU 12 countries. Composite index is formed on World Economic Forum data collected in 2008. Comparisons are done on three levels: overall index, subindices of four distinct sectors of business environment (political-legal, economic, sociocultural and technological), and 22 pinpointed variables that constitute the index. Results show that Croatia lags behind the EU15 countries and has almost equal quality of business environment as EU 12 countries. Based on the results of the analysis of the specific variables, research implicates that in order to improve attractiveness of its business environment the most Croatia should direct its reforms towards following areas: antimonopoly, government spending, market dominance, tertiary enrollment, railroad infrastructure and Internet usage.

The Analysis of the Export Competitiveness of the EU Food Manufacturing Sector1

The food industry is one of Europes most important and dynamic industrial sectors. The degree of competitiveness of the food manufacturing sector in 27 EU countries is analysed empirically, using Eurostat and other relevant data. The EU food industry is currently confronted with several main challenges: high food prices on world markets, administrative burdens and lack of innovation. The main aim of this article is to explore and explain the crucial role of food industry and provide a complete analysis of the comparative advantage and the overall export competitiveness of the mentioned subsector. The methodology of the paper is based on applying indicators of comparative advantage, industry trade and export competitiveness.