Intricate nexus of FDI, remittances, emigration, tourism and growth: Navigating economic landscape of Croatia

Research background: In Croatia, a small-open and growing economy that lags behind more developed countries, globalisation has had a considerable impact on economic stability. The globalised world economy, characterised by international trade, capital flows and migration, has strongly influenced the economic landscape of Croatia. Although foreign direct investment (FDI) and remittances are fuelling economic growth, emigration poses a major challenge. In addition, the vital tourism sector in Croatia emphasises these relationships and can increase overall economic prosperity. Purpose of the article: The main purpose of this study is to analyse the causal relationships between FDI, remittances, emigration and economic growth in Croatia. In addition, it examines the causal relation between FDI, remittances and tourism growth. Moreover, this study examines the relationships between emigration and FDI, as well as emigration and remittances. Methodology: This study adopted a methodological approach that includes time series analysis and panel data analysis to consider the complexity of this issue in more detail. Specifically, the study applied a two-pronged approach such as time series analysis to investigate the causal relationships between FDI and emigration, FDI and tourism growth, remittances and emigration as well as remittances and tourism growth. In parallel, panel data analysis devoted itself to analysing the subtle inter-relationships between FDI, remittances, emigration and their combined effects on economic growth using the same methodological approach. Findings & value added: Key findings show several causal relationships in the Croatian context: emigration substantially affects FDI, remittances influence emigration patterns, a bidirectional causal relationship exists between FDI and tourism growth and tourism growth boosts remittance flows. FDI boosts economic growth in Croatia, which, in turn, causes the flow of remittances and patterns of emigration. The importance of this study lies in highlighting the potential significance of FDI and remittances, as well as the crucial role of tourism in Croatia while emphasising the potential threat posed by emigration to the Croatian economy. These findings provide a crucial framework for policymakers to design targeted strategies that navigate these inter-connected factors, ensuring sustainable economic growth in similar small, growing economies worldwide.