scholarly journals Locational Determinants of FDI in Developing Countries

2013 ◽  
Vol 32 (5) ◽  
pp. 1-18
Author(s):  
Seunghoon Yoo
Keyword(s):  
Developing Countries ◽  
Determinants Of Fdi

Determinants of FDI in developed and developing countries: a quantitative analysis using GMM

2018 ◽  
Vol 45 (2) ◽  
pp. 348-382 ◽  
Author(s):  
Neha Saini ◽  
Monica Singhania
Keyword(s):  
Developing Countries ◽  
Panel Data ◽  
Multinational Corporations ◽  
Management Practices ◽  
Panel Data Analysis ◽  
Random Effect ◽  
Trade Openness ◽  
Content Type ◽  
Generalized Moments ◽  
Determinants Of Fdi

PurposeThe purpose of this paper is to investigate the potential determinants of FDI, in developed and developing countries.Design/methodology/approachThis paper investigates FDI determinants based on panel data analysis using static and dynamic modeling for 20 countries (11 developed and 9 developing), over the period 2004-2013. For static model estimations, Hausman (1978) test indicates the applicability of fixed effect/random effect, while generalized moments of methods (GMM) (dynamic model) is used to capture endogeneity and unobserved heterogeneity.FindingsThe outcome across different countries depicts diverse results. In developed countries, FDI seeks policy-related determinants (GDP growth, trade openness, and freedom index), and in developing country FDI showed positive association for economic determinants (gross fixed capital formulation (GFCF), trade openness, and efficiency variables).Research limitations/implicationsThe destination of FDI is limited to 20 countries in the present paper. The indicator of the institutional environment, namely economic freedom index, used in this paper has received some criticism in calculations.Practical implicationsThe paper enlists recommendations for future FDI policies and may assist government in providing a tactical framework for skill development, thereby increasing manufacturing growth rate. The paper also throws light on vertical and horizontal capital inflows considering resource, strategy, and market-seeking FDI.Social implicationsFDI may bring significant benefits by creating high-quality jobs, introducing modern production and management practices. It highlights how multinational corporations and government contribute to better working conditions in host countries.Originality/valueThe paper uncovers important features like macroeconomic variables, especially country-wise efficiency scores, policy variables, GFCF, and freedom index, for determining FDI inflows in 20 countries using panel data methods and provides a roadmap for developed and developing countries. The study highlights endogeneity and unobserved heteroscedasticity by applying GMM one- and two-step procedure.

Most Common Potential Determinants of FDI: Review of Literature

2016 ◽  
Vol 2 (3) ◽  
pp. 26-31 ◽  
Author(s):  
Javohir Jamolovich Akhmedov
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Literature Review ◽  
Critical Analysis ◽  
Labour Cost ◽  
Market Size ◽  
Research Model ◽  
Review Of Literature ◽  
Review Of The Literature ◽  
Determinants Of Fdi

The aim of this paper is to provide the critical analysis of the potential determinants of FDI. Review of the literature led to the development of research model which provides the most potential determinants of FDI. The importance of FDI is considered to be important for both developed and developing countries. In this regard, the potential determinants of FDI which have been identified as a result of literature review include market size, labour cost and productivity, political risk, infrastructure, economic growth and tax. Nearly all of these variables are reported to have an indecisive relationship with FDI, that is to say, some papers show a positive correlation between variables while other present negative or no relationship at all.

scholarly journals The Economic Determinants of Foreign Direct Investment in Developing Countries and Transition Economies

2008 ◽  
Vol 47 (3) ◽  
pp. 285-299
Author(s):  
İSmail ÇEviŞ ◽  
Burak ÇAmurdan
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Panel Data ◽  
Transition Economies ◽  
Direct Investment ◽  
Inflation Rate ◽  
Host Countries ◽  
Fdi Inflows ◽  
Economic Determinants ◽  
Determinants Of Fdi

The economic growth rates have dramatically increased in developing economies, such as in Latin American, Asian, and Eastern European countries, following the financial liberalisation attempt, especially during the 1990s. Foreign direct investment (FDI) has become an increasingly important element for economic development and integration of developing countries and transition economies in this period with the world economy. The main purpose of this study is to develop an empirical framework to estimate the economic determinants of FDI inflows by employing a panel data set of 17 developing countries and transition economies for the period of 1989:01-2006:04. In our model there are seven explanatory economic variables. They are, respectively, the previous period FDI (the pull factor for new FDI), GDP growth (measures market size), Wage (unit labour costs), Trade Rate (measures the openness of countries), the real interest rates (measures macroeconomic policy), inflation rate (as country risk and macroeconomic policy), and domestic investment (Business Climate). Hence, throughout the paper, only the economic determinants (being separated and apart from the other studies in the literature) of FDI inflows to developing countries and transition economies are studied. It is found out that the previous period FDI which is directly related to the host countries’ economic resources is important as an economic determinant. Besides, it is also understood that the main determinants of FDI inflows are the inflation rate, the interest rate, the growth rate, and the trade (openness) rate and FDI inflows give power to the economies of host countries. JEL classification: F21, R19, C23 Keywords: Foreign Direct Investment, the Determinants of FDI, the Developing Countries, Transition Economies, Panel Data Analysis

The contribution of human capital to foreign direct investment inflows in developing countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ali Abbas ◽  
Imad Moosa ◽  
Vikash Ramiah
Keyword(s):  
Developing Countries ◽  
Human Capital ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Statistical Significance ◽  
Regression Equation ◽  
Basic Question ◽  
Content Type ◽  
Extreme Bounds Analysis ◽  
Determinants Of Fdi

PurposeThis paper is about the effect of human capital on foreign direct investment (FDI). The purpose of this paper is to find out if developing countries with high levels of human capital (educated people and well-trained labour force) are more successful in attracting FDI. The underlying hypothesis has been tested repeatedly without reaching a consensus view or providing an answer to the basic question. This is to be expected because FDI is determined by a large number of factors, making the results sensitive to the selected set of explanatory variables, which forms the basis of the Leamer (1983) critique of the use of multiple regression to derive inference. Furthermore, confirmation bias and publication bias entice researchers to be selective in choosing the set of results they report.Design/methodology/approachThe technique of extreme bounds analysis, as originally suggested by Leamer (1983) and modified by Sala-i-Martin (1997), is used to determine the importance of human capital for the ability of developing countries to attract FDI. The authors use a cross-sectional sample covering 103 developing and transition countries.FindingsThe results show no contradiction between firms seeking human capital and cheap labour. No matter what proxy is used to represent human capital, it turns out that the most important factor for attracting FDI is the variable “employee compensation”, which is the wage bill, implying that multinational firms look for cheap and also skilled labour in the host country.Originality/valueIn this paper, the authors follow the procedure prescribed by Leamer (1983), and modified by Sala-i-Martin (1997), using extreme bounds analysis to distinguish between robust and fragile determinants of FDI, with particular emphasis on human capital. Instead of deriving inference from one regression equation by determining the statistical significance of the coefficient on the variable of interest, the extreme bounds or the distribution of estimated coefficients are used to distinguish between robust and fragile variables. This means that emphasis is shifted from significance, as implied by a single regression equation, to robustness, which is based on a large number of equations. The authors conduct tests on three proxies for human capital to find out if they are robust determinants of FDI and also judge the degree of robustness relative to other determinants.

Determinants of FDI Inflows to Developing Countries of Asia

2012 ◽  
Vol 1 (2) ◽  
pp. 15
Author(s):  
Gulshan Kumar ◽  
Neerja Dhingra ◽  
Meenu Saihjpal
Keyword(s):  
Developing Countries ◽  
Fdi Inflows ◽  
Determinants Of Fdi

Determinants of foreign direct investment inflow to the agricultural sector: a panel-data analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Seyed Reza Zeytoonnejad Mousavian ◽  
Seyyed Mehdi Mirdamadi ◽  
Seyed Jamal Farajallah Hosseini ◽  
Maryam Omidi NajafAbadi
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Panel Data ◽  
Host Country ◽  
Direct Investment ◽  
Agricultural Sector ◽  
Fdi Inflows ◽  
Content Type ◽  
Main Determinants ◽  
Determinants Of Fdi

PurposeForeign Direct Investment (FDI) is an important means of boosting the agricultural sectors of developing economies. The first necessary step to formulate effective public policies to encourage agricultural FDI inflow to a host country is to develop a comprehensive understanding of the main determinants of FDI inflow to the agricultural sector, which is the main objective of the present study.Design/methodology/approachIn view of this, we take a comprehensive approach to exploring the macroeconomic and institutional determinants of FDI inflow to the agricultural sector by examining a large panel data set on agricultural FDI inflows of 37 countries, investigating both groups of developed and developing countries, incorporating a large list of potentially relevant macroeconomic and institutional variables, and applying panel-data econometric models and estimation structures, including pooled, fixed-effects and random-effects regression models.FindingsThe general pattern of our findings implies that the degree of openness of an economy has a negative effect on FDI inflows to agricultural sectors, suggesting that the higher the degree of openness in an economy, the lower the level of agricultural protection against foreign trade and imports, and thus the less incentive for FDI to inflow to the agricultural sector of the economy. Additionally, our results show that economic growth (as an indicator of the rate of market-size growth in the host economy) and per-capita real GDP (as an indicator of the standard of living in the host country) are both positively related to FDI inflows to agricultural sectors. Our other results suggest that agricultural FDI tends to flow more to developing countries in general and more to those with higher standards of living and income levels in particular.Originality/valueFDI inflow has not received much attention with respect to the identification of its main determinants in the context of agricultural sectors. Additionally, there are very few panel-data studies on the determinants of FDI, and even more surprisingly, there are no such studies on the main determinants of FDI inflow to the agricultural sector. We have taken a comprehensive approach by studying FDI inflow variations across countries as well as over time.

scholarly journals Determinants of FDI Inflows to Developing Countries: A Panel Data Analysis

2013 ◽  
Vol 14 (2) ◽  
pp. 28-47
Author(s):  
Qayoom Ab ◽  
Ramachandran Muthiah ◽  
Sofi Irfan
Keyword(s):  
Developing Countries ◽  
Panel Data ◽  
Panel Data Analysis ◽  
Market Size ◽  
Host Countries ◽  
Fdi Inflows ◽  
Labour Costs ◽  
Main Determinants ◽  
Using Data ◽  
Determinants Of Fdi

The aim of this paper is to identify, by estimating a panel econometric model, the factors determining FDI inflows to developing countries over a long period. The study is based on a sample of 32 developing countries. In our analysis, FDI inflows are modeled as a function of the market size, total reserves, infrastructure, labour cost and degree of openness-for the host countries. Using data from 1982 to 2008, a panel data estimator suggests that the market size, total reserves, infrastructure and labour costs are the main determinants of FDI inflows to developing countries. Our interesting finding is that openness of an economy is insignificant in determining the FDI inflows.

scholarly journals Determinants of FDI: Does democracy matter?

2014 ◽  
Vol 9 (2) ◽  
Author(s):  
Hasan Farazmand ◽  
Mahvash Moradi
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Foreign Investments ◽  
Literacy Rate ◽  
A Share ◽  
Determinants Of Fdi

Having access to foreign investments allows a country to take advantage of opportunities to which they would otherwise not have access. Many factors interfere with the ability to attract investments in developing countries, but there is lack of consensus on which factors play an unambiguous role. Using different econometric techniques for a data sample of 5 developing countries and the period 1990 to 2012, this study identifies those factors that most explain the determinants of foreign direct investment. Based on results, democracy can positively affect investors’ decisions about where to locate capital. The findings also show that foreign direct investment as a share of GDP, is significantly associated with low corruption, inflation, high openness, literacy rate and infrastructure.

Sign in / Sign up

Export Citation Format

Share Document