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Abstract

The increased movements of goods and services across international borders has generated a vivid academic debate regarding the consequences of foreign direct investment and human development on the terms of trade and economic growth. In this context, the developing states have received particular attention. Yet, the findings differ depending on the selected countries, variables and used methodology. Therefore, to bring more light on the existing literature, the aim of this study is to investigate the impact of FDI inflows and human development on the export upgrading in the EU transition economies during the period 1995-2014. The empirical analyses revealed that, generally, the human development positively influenced the export upgrading in the long term, but the FDI inflows had a significant impact on the export upgrading in only a few countries included in the sample. However, the impact was relatively lower than the human development and its direction varied between the states.