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The Determinants of Foreign Direct Investment: An Extreme Bounds Analysis

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  • Imad A Moosa

    (School of Economics, La Trobe University)

  • Buly A Cardak

    ()
    (School of Economics, La Trobe University)

Abstract

Eight determining variables of FDI inflows are examined by applying extreme bounds analysis to a cross-sectional sample encompassing data on 140 countries. With GDP per capita serving as the free variable, seven variables are tried as the variables of interest in combination with three other variables. The results reveal that only two variables are robust: exports as a percentage of GDP and telephone lines per 1000 of the population. It is shown that a parsimonious model with a reasonably good predictive power contains the free variable, the two robust variables and two dummies.

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Bibliographic Info

Paper provided by School of Economics, La Trobe University in its series Working Papers with number 2003.02.

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Length: 37 pages
Date of creation: Mar 2003
Date of revision:
Handle: RePEc:trb:wpaper:2003.02

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Keywords: Foreign Direct Investment; Extreme Bounds Analysis; Cross- Sectional Studies; Multicollinearity;

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References

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Citations

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Cited by:
  1. Asongu Simplice & Nguena Christian, 2014. "Equitable and Sustainable Development of Foreign Land Acquisitions: what have we learnt on policy syndromes and implications?," Working Papers 14/001, African Governance and Development Institute..
  2. Hakan Mıhcı & Selim Çağatay & Onur A. Koska, 2011. "The determinants of foreign direct investment outflows from the European Union countries," Economics Bulletin, AccessEcon, vol. 31(3), pages 2653-2666.
  3. Kukenova, Madina & Monteiro, Jose-Antonio, 2008. "Does Lax Environmental Regulation Attract FDI when accounting for "third-country" effects?," MPRA Paper 11321, University Library of Munich, Germany, revised Sep 2008.
  4. Cristina Mihaela Amarandei, 2013. "Corruption And Foreign Direct Investment. Evidence From Central And Eastern European States," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 5, pages 311-322, September.
  5. Muhammad Azam & Muhammad Khan & Nasir Iqbal, 2012. "Impact of Political Risk and Uncertainty on FDI in South Asia," Transition Studies Review, Springer, vol. 19(1), pages 59-77, September.
  6. 0smail Çevi_ & Burak Çamurdan, 2007. "The Economic Determinants of Foreign Direct Investment in Developing Countries and Transition Economies," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(3), pages 285-299.
  7. Grossmann, Axel & Simpson, Marc W. & Brown, Cynthia J., 2009. "The impact of deviation from relative purchasing power parity equilibrium on U.S. foreign direct investment," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(2), pages 521-550, May.
  8. Katona, Klára, 2006. "A magyarországi tőkeimportot befolyásoló tényezők újraértelmezése
    [Reinterpretation of the factors influencing capital imports into Hungary]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 986-1001.
  9. Kandogan, Yener, 2012. "Regional foreign direct investment potential of the states within the US," Journal of Economics and Business, Elsevier, vol. 64(4), pages 306-322.
  10. Akpan Uduak & Isihak Salisu & Asongu Simplice, 2014. "Determinants of Foreign Direct Investment in Fast-Growing Economies: A Study of BRICS and MINT," Working Papers 14/002, African Governance and Development Institute..
  11. Groh, Alexander P. & Wich, Matthias, 2009. "A composite measure to determine a host country's attractiveness for foreign direct investment," IESE Research Papers D/833, IESE Business School.
  12. Fathi Ali & Norbert Fiess & Ronald MacDonald, 2010. "Do Institutions Matter for Foreign Direct Investment?," Open Economies Review, Springer, vol. 21(2), pages 201-219, April.
  13. Wasseem, Mina, 2007. "Are the GCC FDI Location Determinants Favorable?," Economics Discussion Papers 2007-23, Kiel Institute for the World Economy.
  14. Andreia Olival, 2012. "The influence of Doing Business’ institutional variables in Foreign Direct Investment," GEE Papers 0048, Gabinete de Estratégia e Estudos, Ministério da Economia e da Inovação, revised Dec 2012.
  15. Marc Lautier & Francois Moreaub, 2012. "Domestic Investment And Fdi In Developing Countries: The Missing Link," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 37(3), pages 1-23, September.
  16. Groh, Alexander Peter & Wich, Matthias, 2012. "Emerging economies' attraction of foreign direct investment," Emerging Markets Review, Elsevier, vol. 13(2), pages 210-229.
  17. Mina, Wasseem, 2007. "The location determinants of FDI in the GCC countries," Journal of Multinational Financial Management, Elsevier, vol. 17(4), pages 336-348, October.

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