The role of foreign direct investment in promoting economic growth: Evidence from Poland, Ukraine, and Vietnam (2004–2024)

This study investigates the role of foreign direct investment (FDI) in promoting economic growth using data from 2004 to 2024 for Poland, Ukraine, and Vietnam. Employing a mixed-method approach that combines quantitative and qualitative comparative analysis, the research examines how FDI is associated with GDP growth and related growth channels, including infrastructure development, job creation, and technology transfer, while also considering risks such as economic dependence, regional concentration of investment, and uneven development. Using country-level annual time series, the quantitative results indicate that FDI co-moves with long-run economic expansion across the cases, but the strength of the short-run FDI-growth relationship differs by country and is sensitive to shocks and model specification. Poland’s and Vietnam’s annual series show mixed correlations between FDI inflows and GDP growth, suggesting that short-run growth variation is shaped by additional macroeconomic and policy factors beyond investment volumes alone. Ukraine’s experience highlights how conflict conditions can destabilise the FDI-growth relationship, while also showing a positive association in non-outlier periods. Qualitative evidence suggests that institutional stability, sectoral composition of investment, and absorptive capacity influence whether FDI translates into productivity gains and sustained growth. Policy recommendations emphasise strengthening institutions, improving investment quality through sectoral diversification, and reducing regional disparities by supporting investment beyond major urban hubs, thereby promoting more inclusive and resilient economic growth.