IMPACT OF MONETARY AND NON-MONETARY FACTORS ON ECONOMIC DEVELOPMENT OF THE BALTIC COUNTRIES

Анотація

The aim of the paper is to identify the factors affecting economic growth of Baltic countries. Correlation analysis has been exploited to analyze the impact of both monetary and non-monetary factors on gross domestic product dynamics of Estonia, Latvia and Lithuania. The research results show that the most strong relationship in these three countries is observed between GDP dynamics and the following variables: domestic credit provided by financial sector, exports of goods and services including high-technology exports, official exchange rate, household final consumption expenditure, unemployment and real interest rate. The findings of the study indicate that inflation is related to GDP dynamics only in Latvia, foreign direct investments are associated to GDP only in Estonia. Especial role in economic development of these states belongs to export diversification. Companies diversified their product ranges switching to high added value products. Development of new branches and new markets, especially in Euro zone made sufficient impact on economic development of “Baltic Tigers”. Thus, both monetary and non-monetary factors had impact on economic growth of these states.

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