Abstract:

This document, using annual data of 19 Central and Eastern European countries, examined the co-integration and causality relationship between direct foreign investments, tourism revenues, external transparency and economic growth for the period 1995 to 2017. Relationship between the variables has been identified. According to the short-term causality analysis, a bilateral cause has been identified between tourism revenues and economic growth and external transparency and economic growth. Economic growth is also the cause of foreign direct investment. According to the long-term cause analysis, there is a double cause between economic growth and foreign direct investments. According to the findings obtained, since foreign direct investments, tourism revenues and external economic growth have a positive impact, policy makers should pay attention to them in their decisions. The policy makers need to be encouraged to bring more foreign direct investments to the country in order to speed up economic growth. As investments are assumed to move to countries with political and economic stability, policy makers should not ignore this fact. The policy of attracting foreign investments to the country should be aimed at contributing to economic growth and minimizing economic volatility. The careful selection of the investments to be made in tourism will directly affect the number of future tourists. It is therefore necessary that policy makers work with investors.

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