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Foreign Direct Investment and World Pandemic Uncertainty Index: Do Health Pandemics Matter?

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  • Linh Tu Ho

    (Faculty of Economics and Development Studies, University of Economics, Hue University, Hue 530000, Vietnam
    Department of Financial and Business Systems, Lincoln University, Christchurch 7647, New Zealand)

  • Christopher Gan

    (Department of Financial and Business Systems, Lincoln University, Christchurch 7647, New Zealand)

Abstract

This paper explores the impacts of health pandemics on foreign direct investment (FDI) using the new world pandemic uncertainty index (WPUI). We investigate the effects of pandemics, including COVID-19, on FDI based on a sample of 142 economies and sub-samples (incomes and regions) from 1996 to 2019. The two-step system Generalised Method of Moments estimation of linear dynamic panel-data model (DPDGMM) is used in this study. The estimation results are robust with the results of the two-step sequential (two-stage) estimation of linear panel-data models (SELPDM) and the two-step system Generalised Method of Moments estimation (BBGMM). The results show that health pandemics have negative impacts on FDI. Significantly, the uncertainty caused by pandemics creates adverse shocks on FDI net inflows in Asia-Pacific countries and emerging economies.

Suggested Citation

  • Linh Tu Ho & Christopher Gan, 2021. "Foreign Direct Investment and World Pandemic Uncertainty Index: Do Health Pandemics Matter?," JRFM, MDPI, vol. 14(3), pages 1-15, March.
    • Handle: RePEc:gam:jjrfmx:v:14:y:2021:i:3:p:107-:d:511284
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