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The determinants of foreign direct investment: a panel data study for the OECD countries

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  • Agiomirgianakis, G. M.
  • Asteriou, D.
  • Papathoma, K.

Abstract

This study examines panel data evidence concerning empirical relevance between Foreign Direct Investment (FDI) attraction and its determinative effects. The main bulk of FDI is among the developed countries. Indeed, OECD countries has probably been the most potential group in undertaking FDI by caring out about 95% of the total outward FDI while, on average, 75% of the world FDI was directed into OECD countries. In this paper, we first present and analyse the theoretical/empirical findings on FDI, then we focus on assessing the relative significance of the factors that may attract FDI via a panel data regression analysis for a sample consisting of 20 OECD countries for 23 years (1975-1997). Our findings suggest that certain variables such as human capital and trade regime, as well as, the density of infrastructure appear to be robust under different specifications. Positive significance of the agglomeration factor is also observed, confirming the relevant theoretical propositions. However certain deferential variables, such as the governmental policy effect, could not be fully captured due to the statistical homogeneity of the sample.

Suggested Citation

  • Agiomirgianakis, G. M. & Asteriou, D. & Papathoma, K., 2003. "The determinants of foreign direct investment: a panel data study for the OECD countries," Working Papers 03/06, Department of Economics, City University London.
    • Handle: RePEc:cty:dpaper:03/06
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    References listed on IDEAS

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    1. Yoong-Deok Jeon, 1992. "The determinants of Korean foreign direct investment in manufacturing industries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 128(3), pages 527-542, September.
    2. Luiz de Mello, 1997. "Foreign direct investment in developing countries and growth: A selective survey," Journal of Development Studies, Taylor & Francis Journals, vol. 34(1), pages 1-34.
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