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Foreign direct investment and openness in developing economies


  • Panagiotis Liargovas
  • Konstantinos Skandalis


This paper examines the importance of openness for attracting Foreign Direct Investment (FDI) inflows, using a sample of 36 developing economies for the period 1990-2008. It provides a direct test of causality between FDI, openness and other key variables in developing regions of the world: Latin America, Asia, Africa, CIS (commonwealth of independent states), and Eastern Europe. Openness is measured by using eight different indicators. The main empirical findings of the panel regression analysis reveal that in the long run, openness contributes positively to the inflow of FDI in developing economies. index.

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  • Panagiotis Liargovas & Konstantinos Skandalis, 2010. "Foreign direct investment and openness in developing economies," Working Papers 0052, University of Peloponnese, Department of Economics.
  • Handle: RePEc:uop:wpaper:0052

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    References listed on IDEAS

    1. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    2. Hossein Asgharian, 2003. "Are highly leveraged firms more sensitive to an economic downturn?," The European Journal of Finance, Taylor & Francis Journals, vol. 9(3), pages 219-241.
    3. Klevmarken, N. Anders, 1989. "Introduction," European Economic Review, Elsevier, vol. 33(2-3), pages 523-529, March.
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    FDI; openness; developing economies;


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