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Foreign Direct Investment according to different countries’ stages of Human Development

Author

Listed:
  • João Oliveira

    (FEP-UP, School of Economics and Management, University of Porto)

  • Francisco Martins

    (FEP-UP, School of Economics and Management, University of Porto)

  • Elísio Brandão

    (FEP-UP, School of Economics and Management, University of Porto)

Abstract

This investigation studies Foreign Direct Investment determinants with a framework different from the major research present in the literature related to FDI. Its aim is to study and give insights into the reported differences in FDI determinants in the literature. This framework uses thirteen pillars as FDI determinants, which are synthesized recurring to a wide spectre of variables representing nations’ characteristics selected from literature namely from The World Competitiveness Reports of The World Economic Forum. The results of the econometric models estimated by GLS, with data from 186 countries, indicate significant differences on FDI determinants according to the different human development stage; therefore policies regarding FDI attraction must be shaped according to the stage of human development of each country and the specific determinants. The effect of the recent financial crisis in investors decisions regarding FDI was also studied using a structural change test. The results indicate that there was a significant shift in FDI flows.

Suggested Citation

  • João Oliveira & Francisco Martins & Elísio Brandão, 2017. "Foreign Direct Investment according to different countries’ stages of Human Development," FEP Working Papers 594, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:fepwps:594
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    File URL: http://www.fep.up.pt/investigacao/workingpapers/wp594.pdf
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    References listed on IDEAS

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    1. Nobuyuki Iwai & Stanley R. Thompson, 2012. "Foreign Direct Investment and Labor Quality in Developing Countries," Review of Development Economics, Wiley Blackwell, vol. 16(2), pages 276-290, May.
    2. Panagiotis Liargovas & Konstantinos Skandalis, 2012. "Foreign Direct Investment and Trade Openness: The Case of Developing Economies," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 106(2), pages 323-331, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Foreign Direct Investment; Determinants; Human Development Index Levels; Principal Component Analysis; Taxes.;
    All these keywords.

    JEL classification:

    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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