The Geography of Growth: Regional Disparities and the Human Capital-FDI Nexus in Europe

Article DOI: https://doi.org/10.57017/jaes.v21.2(92).07

Author(s):

Andreea-Raluca MOCANU Doctoral School of Finance Bucharest, University of Economic Studies, Bucharest, Romania
Alessandro GIANNOZZI Department of Economics and, Management University of Florence, Florence, Italy

Abstract:

This study investigates the impact of Foreign Direct Investment (FDI) on economic growth across diverse European regions from 2000 to 2023. The analysis into Northern, Central/Eastern, and Southern Europe, the research identifies how structural and socio-economic disparities moderate the FDI-growth relationship. Utilizing Panel Least Squares and Panel EGLS regression models, the findings indicate a robust positive correlation between FDI and GDP growth in Northern and Central/Eastern Europe, while revealing a statistically insignificant impact in the Southern region. A central contribution of the paper is the identification of a "Human Capital Threshold," demonstrating that higher education levels significantly amplify the positive spillovers of FDI. The results suggest that for transitional and emerging European economies, investment in human capital is a prerequisite for translating foreign capital inflows into sustainable economic development. The study provides a regional roadmap for structural reforms aimed at enhancing investment absorptive capacity.

Copyright© 2026 The Author(s). This article is distributed under the terms of the license CC-BY 4.0., which permits any further distribution in any medium, provided the original work is properly cited.

Article’s History: Received 13rd of January, 2026; Revised 19th of February, 2026; Accepted 5th of March, 2026; Available online: 30th of March, 2026. Published as article in the Volume XXI, Spring, Issue 2(92), March, 2026.

How to cite:

Mocanu, A. R., & Giannozzi, A. (2026). The Geography of Growth: Regional Disparities and the Human Capital-FDI Nexus in Europe. Journal of Applied Economic Sciences, Volume XXI, Spring, 2(92), 515 – 528. https://doi.org/10.57017/jaes.v21.2(92).07

Acknowledgments/Funding: The authors did not receive any financial support for the research, authorship, and/or publication of this article.

Conflict of Interest Statement: The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Data Availability Statement: The data that support the findings of this study were obtained from the World Bank Open Data database and are openly available at https://databank.worldbank.org. The datasets were downloaded by the authors and further processed and analysed using Microsoft Excel and Stata.

Ethical Approval Statement: Ethical approval was not required for this study, as it is based exclusively on secondary data obtained from publicly available institutional sources (World Bank Open Data). The data are fully anonymised and do not involve human participants, personal data, or animal subjects.

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