1339 Words6 Pages

2. The model of economic growth based on production functions (the Welfens/Jasinski model and its modifications). To show how FDI influence economic growth of a particular country a model proposed by P.Welfens and P.Jasinski is used. It is based on traditional production functions.

In general the production functionsof Welfens and Jasinski describing the economic growth in the recipient country can bedefined by the following equation[61, p.254]:

(1.9)

where “Y” is an output (GDP or GNP); “K” is fixed assets of local origin (domestic fixed assets); “H” is fixed assets of foreign origin (foreign fixed assets); “L” is the number of employed in the national economy; “z” is the rate of technological progress; “β” is statistically evaluated*…show more content…*

Secondly, in the basic structure of the production function (1.9) proposed byWelfens and Jasinski, domestic fixed-capital and foreign investmentsare supposed to be equally effective, which, as mentioned above, contradicts the observed facts.

Thirdly, the production function of Welfens/Jasinski includes multiplier of scientific and technological progress, which depends on the overall macroeconomic situation and in no way connected with the inflows of FDI. At the same it is obvious that foreign investment primarily perform the function of transferring technological and managerial innovations to the economies of the recipient countries.If we take into consideration the institutional changes in the economy, then they should also reflect the effects related to the openness of the national economy to foreign investments from abroad.

Fourthly, a set of the factors that affect the rate of scientific and technological progress in

In general the production functionsof Welfens and Jasinski describing the economic growth in the recipient country can bedefined by the following equation[61, p.254]:

(1.9)

where “Y” is an output (GDP or GNP); “K” is fixed assets of local origin (domestic fixed assets); “H” is fixed assets of foreign origin (foreign fixed assets); “L” is the number of employed in the national economy; “z” is the rate of technological progress; “β” is statistically evaluated

Secondly, in the basic structure of the production function (1.9) proposed byWelfens and Jasinski, domestic fixed-capital and foreign investmentsare supposed to be equally effective, which, as mentioned above, contradicts the observed facts.

Thirdly, the production function of Welfens/Jasinski includes multiplier of scientific and technological progress, which depends on the overall macroeconomic situation and in no way connected with the inflows of FDI. At the same it is obvious that foreign investment primarily perform the function of transferring technological and managerial innovations to the economies of the recipient countries.If we take into consideration the institutional changes in the economy, then they should also reflect the effects related to the openness of the national economy to foreign investments from abroad.

Fourthly, a set of the factors that affect the rate of scientific and technological progress in

Related

## The Long Run Causality Direction Between Financial Markets Development And Economic Growth

1716 Words | 7 PagesThis thesis investigates the long-run causality direction between financial markets development and economic growth in Croatia, Slovenia, Serbia and China for varying time periods using VAR models and Granger Causality methods. It also explores the interrelationships between variables using the Impulse Response Function. Financial industry consists of two main parts; debt and equity (Krugman and Obstfeld, 2009). These are also called debt and equity markets. Credit markets which are primarily consisted

## A Brief Note On The Growth Theory And The Dual Sector Model Of Economic Development Essay

3646 Words | 15 PagesENDOGENOUS GROWTH THEORY BY MARTIN RIITHO MAINA KCA 14/02073 A Term Paper submitted to Prof. Joseph Ongeri in fulfilment Of the requirements for the course Advanced Macro-Economics, as credit towards the degree of Master of Science (Finance and Economics) KCA UNIVERSITY November, 2014 TABLE OF CONTENTS Page 1.0 Abstract.……..…………………………………………………….….…..3 1.1 Introduction…………………………………….........................................4 2.0 Literature review: Models…………..……………………………

## Non Oil Export Case Study

1021 Words | 5 PagesSeveral studies have been carried out on non-oil export and economic growth both Nigeria and other countries. Some studies have positive relationship between non-oil export and economic growth while some have negative relationship between non-oil export and economic growth. Studies based on Nigerian data whose findings have positive relationship to economic growth are: Obadan (2000); Asanebi (2007); Onayemi and Ishola (2000); Ogbonna (2010); Ozoudo (2010); Opara (2010); Nwachukwu (2014) in all

## The Real Business Cycle Theory Model

1534 Words | 7 Pagestwo main models that draw most attention from the neoclassical period are the Solow model in the long run and the Real Business cycle incorporated with the Ramsey consumption or Euler equation in the short run. The Ramsey model in the short makes a more accurate depiction of what consumption and production in an economy would look like. The model in the short run follows a Dynamic stochastic general equilibrium; this type of model is more complex and allows for it to show economic growth in a closed

## Solow, Swan, 1960) And Solow's Model

718 Words | 3 PagesEven though knowing the production function used in a model provides plenty of useful information about the assumptions made, it does not reveal everything we need to know. In this essay, I will attempt to analyze what information is provided and what is not by the sole knowledge of the production function of the model. I will do that by studying individually each production function we discussed in class. We will make a clear distinction between models with regard to whether exogenous or endogenous

## The Model Of Economic Growth

1751 Words | 8 Pageshere is based on the notion of population increase’ (Bucci 2009) with attention to the solow model and the AK model of economic growth. The differences and similarities in these growth models will be critically assessed with the use of empirical evidence to explain the real world economic growth patterns. The solow model is ‘a theory that analyses growth as being driven by exogenous technological change and the accumulation of factors of production’ (burda&wyplosz 2013 p561). ‘The AK model is an

## Neo Classical Model

1134 Words | 5 PagesNeo classical theory: An economic theory that outlines how a steady economic growth rate will be accomplished with the proper amounts of the three driving forces: labor, capital and technology. The theory states that by varying the amounts of labor and capital in the production function, an equilibrium state can be accomplished. When a new technology becomes available, the labor and capital need to be adjusted to maintain growth equilibrium. This theory emphasizes that technology change

## The Theory Of Economic Growth Theory

1703 Words | 7 Pagesimportant and popular issue in the field of economic research, it attracts many economists and there are many models to explain economic growth. In the history of the development of economic growth theories, there are three important stages which are the Classical Growth theory, the Neoclassical Growth theory and the Endogenous Growth theory. To start with, the Classical Growth theory is based on the Keynesian theory and the representative one is the Harrod–Domar model. It was put forward by Roy F. Harrod

## The Solow Growth Model By Robert Solow

1705 Words | 7 PagesSolow growth model was created by Robert Solow and was introduced to show how factors of production and advances in technology effect the nation’s total output. The model is made up of two components being the production and investment functions. This essay will discuss the possible effects, aspects and traits that an increase in population will have on the steady-state of the Solow growth model. This analysis will be followed by the effects of population growth on the growth rates in the model also

## Why Are Some Countries Rich While Others Poor?

1502 Words | 7 Pagesothers poor. This is a question about economic growth. Take Korea for example. Korea had been divided into North and South Korea since 1948. These two countries share nearly the same geography, history and culture. However, the GDP per capita in the South Korea is only 3.22% of the South Korea. Another phenomenon is that the rapid growth had been observed in East Asian in recent years. This is another key economic issue: whether the growth rate of poor economics are higher than developed ones and which

### The Long Run Causality Direction Between Financial Markets Development And Economic Growth

1716 Words | 7 Pages### A Brief Note On The Growth Theory And The Dual Sector Model Of Economic Development Essay

3646 Words | 15 Pages### Non Oil Export Case Study

1021 Words | 5 Pages### The Real Business Cycle Theory Model

1534 Words | 7 Pages### Solow, Swan, 1960) And Solow's Model

718 Words | 3 Pages### The Model Of Economic Growth

1751 Words | 8 Pages### Neo Classical Model

1134 Words | 5 Pages### The Theory Of Economic Growth Theory

1703 Words | 7 Pages### The Solow Growth Model By Robert Solow

1705 Words | 7 Pages### Why Are Some Countries Rich While Others Poor?

1502 Words | 7 Pages

- Discuss Why Scale And Resolution Are Important For Your Dissertation Research
- The Tragedy Of Medea And Jason
- The Aim Of This Chapter Is To Explore The Current Prevalence
- Current Legislation, Guidelines And Policies Inform Safeguarding
- I Dream Of You. Enrika Greathouse. University Of The People.
- Pop Chips : Katy Perry