IDEAS home Printed from https://ideas.repec.org/a/eme/ijsepp/v36y2009i1-2p105-123.html
   My bibliography  Save this article

Analyses of FDI determinants in developing countries

Author

Listed:
  • Recep Kok
  • Bernur Acikgoz Ersoy

Abstract

Purpose - The purpose of this paper is to investigate the best determinants of foreign direct investment (FDI) in developing countries. Design/methodology/approach - This paper investigates whether FDI determinants affect FDI based on both a panel of data (FMOLS‐fully modified OLS) and cross‐section SUR (seemingly unrelated regression) for 24 developing countries, over the period 1983‐2005 for FMOLS and 1976‐2005 for cross‐section SUR. Findings - The interaction of FDI with some FDI determinants have a strong positive effect on economic progress in developing countries, while the interaction of FDI with the total debt service/GDP and inflation have a negative impact. The most important determinant of FDI is the communication variable. Research limitations/implications - The limitations of the study are based on the development of data set which could be found uninterrupted for 30 years in 24 developing countries. Originality/value - The main objective of this study is to define the main FDI determinants that show the capital flows to developing countries in a globalization framework. The secondary objective of this study is to assign countries' convergence by using the same FDI determinants. FDI flow is one of the main dynamics of globalization phenomenon thus FDI flow determinations will contribute to countries' process of political development.

Suggested Citation

  • Recep Kok & Bernur Acikgoz Ersoy, 2009. "Analyses of FDI determinants in developing countries," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 36(1/2), pages 105-123, January.
    • Handle: RePEc:eme:ijsepp:v:36:y:2009:i:1/2:p:105-123
    DOI: 10.1108/03068290910921226
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/03068290910921226/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/03068290910921226/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/03068290910921226?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lucas, Robert E, Jr, 1990. "Why Doesn't Capital Flow from Rich to Poor Countries?," American Economic Review, American Economic Association, vol. 80(2), pages 92-96, May.
    2. Bruce A. Blonigen, 2019. "Firm-Specific Assets and the Link Between Exchange Rates and Foreign Direct Investment," World Scientific Book Chapters, in: Foreign Direct Investment, chapter 3, pages 89-120, World Scientific Publishing Co. Pte. Ltd..
    3. Hsiao, Frank S.T. & Hsiao, Mei-Chu W., 2006. "FDI, exports, and GDP in East and Southeast Asia--Panel data versus time-series causality analyses," Journal of Asian Economics, Elsevier, vol. 17(6), pages 1082-1106, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xie, En & Reddy, K.S. & Liang, Jie, 2017. "Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions," Journal of World Business, Elsevier, vol. 52(2), pages 127-183.
    2. Mohamed Abdouli & Anis Omri, 2021. "Exploring the Nexus Among FDI Inflows, Environmental Quality, Human Capital, and Economic Growth in the Mediterranean Region," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(2), pages 788-810, June.
    3. David M. Gould & Congyan Tan & Amir S. Sadeghi Emamgholi, 2014. "Attracting Foreign Direct Investment," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 15(2), pages 133-174, September.
    4. Reddy, Kotapati Srinivasa, 2014. "Institutional Dichotomy and Cross-Border Inbound Acquisitions: A Study of Three Cases," MPRA Paper 64221, University Library of Munich, Germany, revised 2014.
    5. Pol Antràs & Mihir A. Desai & C. Fritz Foley, 2009. "Multinational Firms, FDI Flows, and Imperfect Capital Markets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(3), pages 1171-1219.
    6. Reddy, Kotapati Srinivasa, 2015. "Revisiting and Reinforcing the Farmers Fox Theory: A Study (Test) of Three Cases in Cross-border Inbound Acquisitions," MPRA Paper 63561, University Library of Munich, Germany, revised 2015.
    7. Jinyoung Kim & Jungsoo Park, 2013. "Foreign Direct Investment And Country-Specific Human Capital," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 198-210, January.
    8. Gould, David M. & Tan, Congyan & Emamgholi, Amir S. Sadeghi, 2013. "Attracting foreign direct investment : what can South Asia's lack of success teach other developing countries ?," Policy Research Working Paper Series 6696, The World Bank.
    9. Chen, Guo, 2013. "Health costs, factor productivity and foreign direct investment flows," Master's Theses and Plan B Papers 157717, University of Minnesota, Department of Applied Economics.
    10. Reddy, Kotapati Srinivasa, 2015. "Determinants of Cross-border Mergers and Acquisitions: A Comprehensive Review and Future Direction," MPRA Paper 63969, University Library of Munich, Germany, revised 2015.
    11. Pol Antras & Mihir A. Desai & Fritz Foley, 2006. "FDI Flows and Multinational Firm Activity," 2006 Meeting Papers 266, Society for Economic Dynamics.
    12. World Bank, 2013. "Trends and Determinants of Foreign Direct Investment in South Asia," World Bank Publications - Reports 16522, The World Bank Group.
    13. Odili Okwuchukwu, 2015. "Exchange Rate Volatility, Stock Market Performance and Foreign Direct Investment in Nigeria," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 5(2), pages 172-184, April.
    14. Bilgili, Faik & Tülüce, Nadide Sevil Halıcı & Doğan, İbrahim, 2012. "The determinants of FDI in Turkey: A Markov Regime-Switching approach," Economic Modelling, Elsevier, vol. 29(4), pages 1161-1169.
    15. Le, Thai-Ha & Tran-Nam, Binh, 2018. "Relative costs and FDI: Why did Vietnam forge so far ahead?," Economic Analysis and Policy, Elsevier, vol. 59(C), pages 1-13.
    16. Nguyen, Dao Thi Hong & Sun, Sizhong & Anwar, Sajid, 2017. "A long-run and short-run analysis of the macroeconomic interrelationships in Vietnam," Economic Analysis and Policy, Elsevier, vol. 54(C), pages 15-25.
    17. Aizenman, Joshua, 2003. "Volatility, employment and the patterns of FDI in emerging markets," Journal of Development Economics, Elsevier, vol. 72(2), pages 585-601, December.
    18. Adugna Lemi & Sisay Asefa, 2009. "Differential Impacts of Economic Volatility and Governance on Manufacturing and Non-Manufacturing Foreign Direct Investments: The Case of US Multinationals in Africa," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 35(3), pages 367-395.
    19. D’Erasmo, P. & Mendoza, E.G. & Zhang, J., 2016. "What is a Sustainable Public Debt?," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 2493-2597, Elsevier.
    20. Rabah Arezki & Klaus Deininger & Harris Selod, 2015. "What Drives the Global "Land Rush"?," The World Bank Economic Review, World Bank, vol. 29(2), pages 207-233.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:ijsepp:v:36:y:2009:i:1/2:p:105-123. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.