Exports, Investments and Economic Growth: An Empirical Investigation of the Three Baltic Countries

Dritsaki Chaido, Vazakidis Athanasios, Adamopoulos Antonios

Abstract: This paper investigates the relationship among exports, investments and economic growth, in the three Baltic countries which have recently joined the European Union. The purpose of this paper is to examine the long run relationship between these variables using quarterly data for the period 1992:I-2000:IV and applying the co-integration analysis as suggested by Johansen and Juselious. Then a trivariate autoregressive vector model (VAR) is used to estimate the short and long run relationships of variables of this model. The results of this paper suggested that the exports growth in combination with the increase of investments have a positive effect on the economic growth of the three Baltic countries.

Keywords: exports, investment, economic growth, co-integration, Baltic countries

JEL: O10, C22