Determinants of Foreign Direct Investment in Developing Countries: A Comparative Analysis
AbstractBy bridging the gap between domestic savings and investment and bringing the latest technology and management know-how from developed countries, foreign direct investment (FDI) can play an important role in achieving rapid economic growth in developing countries. The fact is that developing countries have not been considered as favorable destinations for FDI, as FDI mostly goes to developed countries. Moreover, among the developing countries, a few countries, such as China, India, Nigeria and Sudan are the major FDI recipient countries. The rest of the developing countries are simply fighting for the scraps. Using panel data from 68 low-income and lower-middle income developing countries, this paper strives to identify the factors that determine FDI inflow to the developing countries. Based on a comparative discussion focusing on why some countries are successful in attracting FDI while others are not, the paper demonstrates that countries with larger GDP and high GDP growth rate, higher proportion of international trade and with more business friendly environment are more successful in attracting FDI.
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 The Australian National University, Australia South Asia Research Centre in its series ASARC Working Papers with number 2010-13.
Date of creation: 2010
Date of revision:
Contact details of provider:
Postal: Crawford Building, Lennox Crossing, Building #132, Canberra ACT 0200
Phone: +61 2 6125 4705
Fax: +61 2 6125 5448
Web page: https://crawford.anu.edu.au/acde/asarc/
More information through EDIRC
FDI; developing country; low income country; lower middle income country;
Find related papers by JEL classification:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
This paper has been announced in the following NEP Reports:
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.:
- Kimura, Hidemi & Todo, Yasuyuki, 2010.
"Is Foreign Aid a Vanguard of Foreign Direct Investment? A Gravity-Equation Approach,"
Elsevier, vol. 38(4), pages 482-497, April.
- Hidemi Kimura & Yasuyuki Todo, 2009. "Is Foreign Aid a Vanguard of Foreign Direct Investment? A Gravity-Equation Approach," Development Economics Working Papers 22881, East Asian Bureau of Economic Research.
- Hidemi Kimura & Yasuyuki Todo, 2009. "Is Foreign Aid a Vanguard of Foreign Direct Investment? A Gravity-Equation Approach," Asia Pacific Economic Papers 380, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
- Prema-chandra Athukorala, 2009. "Trends and Patterns of Foreign Direct Investments In Asia: A Comparative Perspective," Departmental Working Papers 2009-08, The Australian National University, Arndt-Corden Department of Economics.
- Kinda, Tidiane, 2010. "Investment Climate and FDI in Developing Countries: Firm-Level Evidence," World Development, Elsevier, vol. 38(4), pages 498-513, April.
- Nuno Crespo & Maria Paula Fontoura, 2005.
"Determinant Factors of FDI Spillovers – What Do We Really Know?,"
Working Papers Department of Economics
2005/06, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
- Crespo, Nuno & Fontoura, Maria Paula, 2007. "Determinant Factors of FDI Spillovers - What Do We Really Know?," World Development, Elsevier, vol. 35(3), pages 410-425, March.
- Ewe-Ghee Lim, 2001. "Determinants of, and the Relation Between, Foreign Direct Investment and Growth," IMF Working Papers 01/175, International Monetary Fund.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Crawford School Working Papers in December 2011
by David Stern in Stochastic Trend on 2012-01-03 00:04:00
- Mauricio Zelaya & Ayse Yüce, 2014. "Foreign Direct Investment Decisions into China and India," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(3), pages 300-316, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.