Analyses of FDI determinants in developing countries

Abstract

Access to this document was granted through an Emerald subscription provided by NORTH CAROLINA STATE UNIVERSITY For Authors:If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service. Information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comWith over forty years' experience, Emerald Group Publishing is a leading independent publisher of global research with impact in business, society, public policy and education. In total, Emerald publishes over 275 journals and more than 130 book series, as well as an extensive range of online products and services. Emerald is both COUNTER 3 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this paper is to investigate the best determinants of foreign direct investment (FDI) in developing countries. Design/methodology/approach -This paper investigates whether FDI determinants affect FDI based on both a panel of data (FMOLS-fully modified OLS) and cross-section SUR (seemingly unrelated regression) for 24 developing countries, over the period 1983 -2005 for FMOLS and 1976 -2005 for cross-section SUR. Findings -The interaction of FDI with some FDI determinants have a strong positive effect on economic progress in developing countries, while the interaction of FDI with the total debt service/GDP and inflation have a negative impact. The most important determinant of FDI is the communication variable.Research limitations/implications -The limitations of the study are based on the development of data set which could be found uninterrupted for 30 years in 24 developing countries. Originality/value -The main objective of this study is to define the main FDI determinants that show the capital flows to developing countries in a globalization framework. The secondary objective of this study is to assign countries' convergence by using the same FDI determinants. FDI flow is one of the main dynamics of globalization phenomenon thus FDI flow determinations will contribute to countries' process of political development.

Market Size as a Determinant of the Foreign Direct Investment Inflows in the Western Balkans Countries

“…Using panel data for 24 developing countries, Kok & Ersoy (2009) confirmed in a more recent study that there is a positive relationship between foreign direct investment and market size. Wadhwa & Reddy (2011) explored the impact of market seeking, efficiency seeking and resource seeking factors of host countries on foreign direct investment inflows of host countries by taking a sample of 10 Asian countries in the time period 1991-2008.…”

The Impact of Infrastructure on Foreign Direct Investment: The Case of Pakistan

“…Among huge literature on FDI, few researchers have well acknowledged the significant contribution of infrastructure along with other determinants to attract FDI inflows. Some of them are Kok and Ersoy (2009), Sekkat and Veganzones-Varoudakis (2004), Asiedu (2002), Morrisset (2000) and Wheeler and Mody (1992). These studies argued that Multinational Corporations (MNCs) seek such markets where they can achieve cost reduction and maximization of benefits and such objective becomes easy to achieve where public goods are in better condition and supportive to investors.…”

Determinants of Foreign Direct Investment in Middle-Income Countries: New Middle-Income Trap Evidence

“…Recent and previous research studies consider an array of factors in order to explain FDI inflows to developing and emerging countries (Addison and Heshmati, 2003;Akpan et al, 2014;Al-Khouri, 2014;Biswas, 2002;Bitzenis and Marangos, 2007;Blonigen, 2005;Demirhan and Masca, 2008;Jadhav, 2012;Kinoshita and Campos, 2003;Kok and Ersoy, 2009;Noorbakhsh et al, 2001;Ranjan and Agrawal, 2011;Sichei and Kinyondo, 2012;Uttama and Peridy, 2010;Vijayakumar et al, 2010). Natural resources, market size, infrastructure, trade openness, macroeconomic variables, political risk, business environment, human capital and labour cost are among the most widely examined determinants in the literature.…”