The Impact of the Global Financial Crisis on the Economic Development in the Eurasian Region

Year 2017, Volume: 1 Issue: 1, 155 - 173, 01.06.2017

Natalya Ketenci

Abstract

This study presents an empirical
analysis of  the  impact 
of  the  global financial crisis on the economic
development of the Eurasian region. The region covers fifteen states of the
former Soviet Union: Armenia, Azerbaijan, Belarus, Estonia, Georgia,
Kazakhstan, Kyrgyz Republic, Latvia, Lithuania, Moldova, Russian Federation,
Tajikistan, Turkmenistan, Ukraine, Uzbekistan. Emerging economies of estimated countries are highly attractive
for foreign investors, who stimulate economic growth in the region. This
paper  particularly investigates the
relationship between economic growth and international capital flows in the
Eurasian region before and after the global financial crisis. Panel estimations using annual data for the period
1990-2014 are made applying the Generalized Method of Moments
estimation technique for the
dynamic panel data, developed by Hansen (1982).
Empirical results reveal that the main determinant of the regions’
economic development is FDI
inflow. This study finds evidence that after the global financial crisis,
economic growth in the region becomes more responsive to capital flows compared
to the pre-crisis period.

Keywords

Economic growth, capital flows, generalized method of moments (GMM), Eurasia, dynamic panel data

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