General and Chinese foreign direct investments in Serbian economy and economic development

Abstract

This paper examines the impact of Chinese investments in the infrastructure facilities within the Belt and Road Initiative on the Serbian economy. The research objectives are to measure the impact of the general foreign direct investments and the Chinese foreign direct investments on the key indicators of the Serbian economy, to assess their impact on the Serbian economy in general, and to compare their effects. The initial hypothesis is that the effects of the Chinese foreign direct investments on infrastructure are significantly more favourable than foreign direct investments originating in other countries, primarily due to the sectors they are implemented, and the different approach of Chinese investors, which implies the mutual benefit of partners and long-term interests in a particular country or region. The impact of the Chinese and general foreign direct investments on several key economic indicators of the Serbian economy is measured separately and compared. Since there are several dependent variables involved in the correlation, the Multiple Variable Analysis is used. The statistical procedure includes two tests of the statistical significance of the estimated correlation: P-value, as a part of Multiple Variable Analysis, and F-test, which is commonly used for small samples. The results show much stronger and more positive impact of the Chinese investments than general foreign direct investments, but also point to the direction of a change, such as increasing of import of goods and services, the reduction of unemployment, and the increase in the employment rate, as well as the dege of openness of the economy. Some results can be considered as the general effects of joining the Belt and Road Initiative, that is, they can have great significance for all countries on one of the many directions of the new Silk Road.