Open Access Article SciPap-934
FDI and Regional Income Disparity in the Czech Republic
by Jagannath Mallick 1,* and Pavel Zdražil 2

1 Department of Economics, Indira Gandhi National Open University (IGNOU), , New Delhi 110067, India

2 Faculty of Economics and Administration, University of Pardubice, Studentská 95, Pardubice 532 10, Czechia

* Authors to whom correspondence should be addressed.

Abstract: The aim of this paper is to evaluate the impact of FDI along with domestic physical investment and human capital on the regional income, and their role in the regional income convergence within the Czech economy over the periods from 1998-99 to 2013-14. The paper considers 14 regions of the Czech Republic and uses panel fixed effect regression and dynamic panel growth framework for the empirical analysis. The result finds that the role of physical capital formation and FDI along with the human capital are crucial for the regional disparity in income in the Czech Republic. There is also evidence of the convergence of per capita income at the speed of 7.8 per cent among the regions by conditioning physical investment and human capital along with FDI. This paper suggests that regional disparity in income can be reduced by the equitable allocation of investment and FDI, and equal development of human capital.

Keywords: Investment, Convergence, Regional Growth, Panel Data Methods

JEL classification:   C23 - Panel Data Models • Spatio-temporal Models,   E22 - Investment • Capital • Intangible Capital • Capacity,   R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

SciPap 2018, 26(2), 934

Received: 29 August 2017 / Accepted: 27 June 2018 / Published: 23 August 2018