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Examining the determinants of inward FDI: Evidence from Norway

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  • Boateng, Agyenim
  • Hua, Xiuping
  • Nisar, Shaista
  • Wu, Junjie

Abstract

This paper examines the impact of macroeconomic factors on foreign direct investment (FDI) inflows in Norway under the location-specific advantage. Using cointegrating regressions with Fully Modified OLS (FMOLS) and the vector autoregressive and error correction model (VAR/VECM) on quarterly data, the study finds that the real GDP, sector GDP, exchange rate and trade openness have a positive and significant impact on FDI inflows. However, money supply, inflation, unemployment and interest rate produced significantly negative results. The results imply that in seeking to promote a dynamic competitive advantage in the home country, governments need to pay more attention to their macroeconomic policies to help fashion and reduce production and transaction costs of MNEs.

Suggested Citation

  • Boateng, Agyenim & Hua, Xiuping & Nisar, Shaista & Wu, Junjie, 2015. "Examining the determinants of inward FDI: Evidence from Norway," Economic Modelling, Elsevier, vol. 47(C), pages 118-127.
  • Handle: RePEc:eee:ecmode:v:47:y:2015:i:c:p:118-127 DOI: 10.1016/j.econmod.2015.02.018
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    Cited by:

    1. Shah, Mumtaz Hussain, 2016. "The Effect of Macroeconomic Stability on Inward FDI in African Developing Countries," MPRA Paper 82014, University Library of Munich, Germany.
    2. repec:bla:coecpo:v:35:y:2017:i:3:p:484-504 is not listed on IDEAS
    3. Xu, Xu & Sylwester, Kevin, 2016. "The effects of foreign direct investment on emigration: The roles of FDI source country, education, and gender," Economic Modelling, Elsevier, vol. 55(C), pages 401-409.
    4. Mirel-Daniel Simionescu, 2017. "Determinants of Foreign Direct Investments in Bulgaria and Romania in the Context of Recent Economic Crisis," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 3(1), pages 68-72, March.
    5. Brun, Jean-François & Gnangnon, Sèna Kimm, 2017. "Does trade openness contribute to driving financing flows for development?," WTO Staff Working Papers ERSD-2017-06, World Trade Organization (WTO), Economic Research and Statistics Division.

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    Keywords

    Determinants; FDI; Norway;

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