Examining the Regional Aspect of Foreign Direct Investment to Developing Countries
AbstractThis paper applies a general-to-specific analysis to detect regularities in the driving forces of foreign direct investment (FDI) that can explain why some regions are more attractive to foreign investors than others. The results suggest that regional differences in FDI inflows to African, Asian and Latin American countries can be fully explained by structural characteristics rather than fixed regional effects. The implication of this finding is that countries that are lagging behind other developing countries in attracting foreign capital have the opportunity to implement policies aimed at improving the investment climate for foreign investors. This also means that there is no African bias. Among a large number of return and risk variables applied in the empirical literature, growth and inflation turn out to be the only robust and significant FDI determinants across regions although the size of their impact varies.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 09-02.
Length: 10 pages
Date of creation: Feb 2009
Date of revision:
Contact details of provider:
Postal: Øster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark
Phone: (+45) 35 32 30 10
Fax: +45 35 32 30 00
Web page: http://www.econ.ku.dk
More information through EDIRC
foreign direct investment; Africa; Asia; Latin America; general-to-specifc;
Find related papers by JEL classification:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
This paper has been announced in the following NEP Reports:
- NEP-AFR-2009-02-28 (Africa)
- NEP-ALL-2009-02-28 (All new papers)
- NEP-DEV-2009-02-28 (Development)
- NEP-SEA-2009-02-28 (South East Asia)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Asiedu, Elizabeth & Lien, Donald, 2004. "Capital Controls and Foreign Direct Investment," World Development, Elsevier, Elsevier, vol. 32(3), pages 479-490, March.
- W. A. Naude & W. F. Krugell, 2007. "Investigating geography and institutions as determinants of foreign direct investment in Africa using panel data," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 39(10), pages 1223-1233.
- Bengoa, Marta & Sanchez-Robles, Blanca, 2003. "Foreign direct investment, economic freedom and growth: new evidence from Latin America," European Journal of Political Economy, Elsevier, vol. 19(3), pages 529-545, September.
- Azmat Gani, 2007. "Governance and foreign direct investment links: evidence from panel data estimations," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 14(10), pages 753-756.
- Morisset, Jacques, 2000. "Foreign direct investment in Africa : policies also matter," Policy Research Working Paper Series 2481, The World Bank.
- Shigeyuki Hamori & Ivohasina Razafimahefa, 2005. "An Empirical Analysis of FDI Competitiveness in Sub-Saharan Africa and Developing Countries," Economics Bulletin, AccessEcon, vol. 6(20), pages 1-8.
- Elizabeth Asiedu, 2006. "Foreign Direct Investment in Africa: The Role of Natural Resources, Market Size, Government Policy, Institutions and Political Instability," The World Economy, Wiley Blackwell, vol. 29(1), pages 63-77, 01.
- Adugna Lemi & Sisay Asefa, 2003. "Foreign Direct Investment and Uncertainty: Empirical Evidence from Africa," The African Finance Journal, Africagrowth Institute, Africagrowth Institute, vol. 5(1), pages 36-67.
- Bevan, Alan A. & Estrin, Saul, 2004. "The determinants of foreign direct investment into European transition economies," Journal of Comparative Economics, Elsevier, vol. 32(4), pages 775-787, December.
- Sebastian Edwards, 1992. "Capital Flows, Foreign Direct Investment, and Debt-Equity Swaps in Developing Countries," NBER Working Papers 3497, National Bureau of Economic Research, Inc.
- Hubert Janicki & Phanindra Wunnava, 2004. "Determinants of foreign direct investment: empirical evidence from EU accession candidates," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 36(5), pages 505-509.
- Klimis Vogiatzoglou, 2007. "Vertical Specialization and New Determinants of FDI: Evidence from South and East Asia," Global Economic Review, Taylor & Francis Journals, Taylor & Francis Journals, vol. 36(3), pages 245-266.
- Hendry, David F., 1995. "Dynamic Econometrics," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780198283164, October.
- Frenkel, Michael & Funke, Katja & Stadtmann, Georg, 2004. "A panel analysis of bilateral FDI flows to emerging economies," Economic Systems, Elsevier, Elsevier, vol. 28(3), pages 281-300, September.
- Jo Jakobsen & Indra de Soysa, 2006. "Do Foreign Investors Punish Democracy? Theory and Empirics, 1984-2001," Kyklos, Wiley Blackwell, Wiley Blackwell, vol. 59(3), pages 383-410, 08.
- Ivar Kolstad & Espen Villanger, 2008. "Foreign Direct Investment in the Caribbean," Development Policy Review, Overseas Development Institute, vol. 26(1), pages 79-89, 01.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Hoffmann).
If references are entirely missing, you can add them using this form.