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A Var Analysis On The Determinants Of Fdi Inflows: The Case Of Sri Lanka

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  • WIJEWEERA, Albert

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  • MOUNTER, Stuart

Abstract

Foreign direct investment in Sri Lanka has grown immensely since the initiation of economic reforms in 1977. Further escalations in FDI inflows are considered an integral component of the current Sri Lankan Government’s intentions to foster economic growth. This paper examines the long-run effects on Sri Lanka’s FDI inflows from changes in key macroeconomic variables of interest. Findings indicate that, of the five variables considered, the wage rate is the most important determinant of inbound FDI to Sri Lanka. However, other major economic indicators such as GDP, exchange rates, interest rates, and the level of external trade should also be given due consideration in policies designed to attract FDI inflows.

Suggested Citation

  • WIJEWEERA, Albert & MOUNTER, Stuart, 2008. "A Var Analysis On The Determinants Of Fdi Inflows: The Case Of Sri Lanka," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 8(1), pages 189-198.
  • Handle: RePEc:eaa:aeinde:v:8:y:2008:i:1_16
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    References listed on IDEAS

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    1. Atkinson, A B, 1987. "On the Measurement of Poverty," Econometrica, Econometric Society, vol. 55(4), pages 749-764, July.
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    Cited by:

    1. Valli, Mohammed & Masih, Mansur, 2014. "Is there any causality between inflation and FDI in an ‘inflation targeting’ regime? Evidence from South Africa," MPRA Paper 60246, University Library of Munich, Germany.
    2. Christopher E.S. WARBURTON, 2012. "Globalization And Structural Change In The US Manufacturing Sector, 1987-2010," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 12(1).

    More about this item

    Keywords

    FDI; Sri Lanka; VAR;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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