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Identifying the robust economic, geographical and political determinants of FDI: an Extreme Bounds Analysis

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Listed:
  • Melisa Chanegriha

    () (Middlesex University)

  • Chris Stewart

    () (Kingston University)

  • Christopher Tsoukis

    () (Keele University)

Abstract

Abstract Understanding what determines Foreign Direct Investment (FDI) inflows remains a primary concern of economists and policy makers; yet the uncertainty surrounding FDI theories and empirical approaches has created ambiguity regarding the determinants of FDI. This paper applies Extreme Bounds Analysis to identify the robust determinants of FDI using panel data covering 168 countries from 1970 to 2006. We consider 58 potential economic, geographic and political determinants and find that almost one-third are robust, including: openness, education, government spending, corporate tax rate, infrastructure, experience of conflict, democratic governance, natural resources, geographic location, number of borders, coastal location and language.

Suggested Citation

  • Melisa Chanegriha & Chris Stewart & Christopher Tsoukis, 2017. "Identifying the robust economic, geographical and political determinants of FDI: an Extreme Bounds Analysis," Empirical Economics, Springer, vol. 52(2), pages 759-776, March.
  • Handle: RePEc:spr:empeco:v:52:y:2017:i:2:d:10.1007_s00181-016-1097-1 DOI: 10.1007/s00181-016-1097-1
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    More about this item

    Keywords

    Foreign Direct Investment; Extreme Bounds Analysis; Panel data; Economic; geographic and political determinants;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics

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