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There have been significant increases in the flows of foreign direct investment inflows in the world together with the globalization process as of 1980s. In this regard, this study examines the impact of foreign direct investment inflows on the tax revenues in the selected transition economies of the European Union including Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia and Slovenia during the period 1996-2012 by using Dumitrescu and Hurlin (2012) causality test. We found that there was unidirectional causality from foreign direct investment net inflows to the tax revenues, and also there was unidirectional causality from foreign direct investment net inflows to the economic growth.
Keywords: Tax revenues, foreign direct investment inflows, economic growth, panel data analysis
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