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Determinants of Foreign Direct Investment in Developing Countries: A Panel Data Analysis

Author

Listed:
  • Behrooz Shahmoradi

    (Faculty Member of Department of Economics, Sciences and Researches Branch, Islamic Azad University, Kurdistan, Iran)

  • Mostafa Baghbanyan

    (Faculty member of Islamic Azad University, Sanandaj branch)

Abstract

The aim of this paper is to explore, by estimating a panel data econometric model, thedetermining factors of foreign direct investment (FDI) inflows in developing countriesover the period of 1990-2007. The study is based on a sample of panel data on 25developing countries. In the model, dependent variable is FDI inflows. Independentvariables are FDI outflows, GDP, BOP, population, openness of the economy, mobile,internet, technology, ODA and labor. According to the econometric results, in themain model, openness of the economy, market size, availability of labour force, ODA,mobile, technology and internet have positive effects on FDI inflows in developingcountries.

Suggested Citation

  • Behrooz Shahmoradi & Mostafa Baghbanyan, 2011. "Determinants of Foreign Direct Investment in Developing Countries: A Panel Data Analysis," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 1(2), pages 49-56, June.
  • Handle: RePEc:asi:aeafrj:2011:p:49-56
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    References listed on IDEAS

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    1. Jamuna Agarwal, 1980. "Determinants of foreign direct investment: A survey," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 116(4), pages 739-773, December.
    2. Asiedu, Elizabeth, 2002. "On the Determinants of Foreign Direct Investment to Developing Countries: Is Africa Different?," World Development, Elsevier, vol. 30(1), pages 107-119, January.
    3. Vinaye D. Ancharaz, 2003. "Determinants of Trade Policy Reform in Sub-Saharan Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 12(3), pages 417-443, September.
    4. Kaddour Hadri, 2000. "Testing for stationarity in heterogeneous panel data," Econometrics Journal, Royal Economic Society, vol. 3(2), pages 148-161.
    5. Hans-Peter Lankes & A. J. Venables, 1996. "Foreign direct investment in economic transition: the changing pattern of investments," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 4(2), pages 331-347, October.
    6. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 38(2), pages 112-134.
    7. Masahiko Itaki, 1991. "A Critical Assessment of the Eclectic Theory of the Multinational Enterprise," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 22(3), pages 445-460, September.
    8. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    9. Jordaan, Jacob A., 2005. "Determinants of FDI-induced externalities: New empirical evidence for Mexican manufacturing industries," World Development, Elsevier, vol. 33(12), pages 2103-2118, December.
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    Cited by:

    1. Wei LIU & Ziwei HUANG & Abdullah MUHAMMAD IBRAHIM, 2013. "The Path Dependence of Industry Structure Adjustment in Chongqing: Central Government Political Decision," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(8), pages 978-990, August.

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