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Determinants of FDI inflows to developing countries: a panel data analysis

Author

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  • Khachoo, Ab Quyoom
  • Khan, Mohd Imran

Abstract

The aim of this paper is to identify, by estimating a panel econometric model, the factors determining FDI inflows to developing countries over a long period. The study is based on a sample of 32 developing countries. In our analysis, FDI inflows are modeled as a function of the market size, total reserves, infrastructure, labour cost and degree of openness for the host countries. Using data from 1982 to 2008, a panel data estimator suggests that the market size, total reserves, infrastructure and labour costs are the main determinants of FDI inflows to developing countries.

Suggested Citation

  • Khachoo, Ab Quyoom & Khan, Mohd Imran, 2012. "Determinants of FDI inflows to developing countries: a panel data analysis," MPRA Paper 37278, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:37278
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    File URL: https://mpra.ub.uni-muenchen.de/37278/1/MPRA_paper_37278.pdf
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    References listed on IDEAS

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    1. repec:ebl:ecbull:v:6:y:2007:i:33:p:1-9 is not listed on IDEAS
    2. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    3. 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.
    4. 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.
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    Cited by:

    1. repec:eee:rensus:v:78:y:2017:i:c:p:1367-1377 is not listed on IDEAS

    More about this item

    Keywords

    FDI Inflows; Fully Modified Ordinary Least Squares (FMOLS); Pedroni’s Panel Cointegration Methodology; Developing Countries;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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