Factors Influencing Foreign Direct Investment (FDI) in "South" and "Southeast" Asian Economies

Adhikary, Bishnu Kumar; Mengistu, Alemu Aye

doi:10.1163/221190008x00223

Cited by 10 publications

(6 citation statements)

References 6 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…A 1% increase in GDP accounts for a nearly 18.5% increase in FDI inflows in Bangladesh, demonstrating that the longer a country"s economic growth continues, the more foreign investors invest in that country. In this case, a study by Adhikary and Mengistu (2018) can reinforce our observations. Investors do not look at records but rather at the country"s current economic situation, as reflected by the negative coefficient for the lagged period of the Log of GDP on FDI inflows.…”

Section: Summary Of Findingssupporting

confidence: 83%

“…GDP, inflation rate, infrastructure level, trade openness, and labor cost productivity all have a strong positive relationship with FDI inflow in Bangladesh, while political stability and tax rate have a strong negative relationship. Adhikary and Mengistu (2018) investigated foreign direct investment inflows into South and Southeast Asian economies. Over 27 years , they used data from 12 South and Southeast Asian countries.…”

Section: Literature Reviewmentioning

confidence: 99%

See 1 more Smart Citation

Do Macroeconomic Factors Defy the Expected Relationship with FDI Inflows in a Developing Country? An Econometric Analysis Based on Bangladesh

Arefin¹,

Roy²,

Mallik³

2021

IJEF

View full text Add to dashboard Cite

Through econometric analysis, this study investigates the effects of various economic factors on foreign direct investment (FDI) inflows in Bangladesh from 1980 to 2019. ARDL (Autoregressive Distributed Lag) has been used to estimate the economic determinants of FDI inflows in Bangladesh after removing the trends from the independent variables. Empirical results revealed that GDP, Fixed Telephone Subscribers, Inflation Rate, and Education Spending are the eminent economic determinants of FDI. Subsequently, a Granger causality test and Vector Auto Regression (VAR) confirmed the absence of any long-term impact of these variables on FDI. From the analysis, it is evident that the ADF (Augmented Dickey-Fuller) test is necessary to remove the trend from these variables and corner those variables for the ARDL method to find the significant ones that have substantial impacts on FDI in Bangladesh. GDP, Fixed Telephone Subscribers, Inflation Rate, and Education Spending are found to be statistically significant while all of them having a positive impact on the FDI. Even though this study matches with many other previous studies conducted by researchers, some exciting findings contradict the expected result and open new doors for further research.

show abstract

Section: Summary Of Findingssupporting

confidence: 83%

Section: Literature Reviewmentioning

confidence: 99%

Do Macroeconomic Factors Defy the Expected Relationship with FDI Inflows in a Developing Country? An Econometric Analysis Based on Bangladesh

Arefin¹,

Roy²,

Mallik³

2021

IJEF

View full text Add to dashboard Cite

show abstract

“…In fact, FDI literature on the determinants of FDI is thriving, divergent, and often confounding. For example, earlier studies by Kok and Ersoy (2009), Armstrong (2009), Adhikary and Mengistu (2008), Noy and Vu (2007), Aizenman and Noy (2006), Ramirez (2006), Moosa and Cardak (2006), Asiedu and Lien (2004), Campos and Kinoshita (2003), Chakrabarty (2001), Bevan and Estrin (2000), and Cheng and Kwan (2000) revealed a positive relationship between FDI and market size (GDP). In contrast, Jaspersen et al (2000) and Edwards (1990) documented a negative relationship between them, whereas Villaverde and Maza (2015) and Wei (2000) did not find any relationship.…”

Section: Introductionmentioning

confidence: 94%

Factors influencing foreign direct investment in South Asian economies

Adhikary

2017

SAJBS

Self Cite

View full text Add to dashboard Cite

Purpose The purpose of this paper is to investigate the macroeconomic determinants of foreign direct investment (FDI) for the top five South Asian economies, namely, Bangladesh, India, Pakistan, Sri Lanka, and Nepal, and to examine whether these factors are the same for each. Design/methodology/approach This study employs fully modified ordinary least squares and two-stage least squares estimation methods. Findings This study shows that South Asian economies have a number of FDI determinants in common. For example, market size and human capital are the two most common factors attracting FDI in each country (except for Nepal, which revealed a negative correlation between FDI and market size). Other factors, such as infrastructure, domestic investment, lending rates, exchange rates, inflation, financial stability/crisis, and stock turnover entered into regression with both positive and negative signs, thereby indicating that the underlying theories on FDI do not provide a clear prediction of the direction of the effect of a particular variable on FDI. Research limitations/implications This paper studied the effects of demand-side factors on FDI. A comparative study of the supply-side factors may add further knowledge. Practical implications This paper provides evidence to show that the determinants of FDI are indeed country-specific. Thus, to design a suitable FDI policy, it would not be wise to solely rely on other economies’ FDI experiences. Originality/value This paper provides updated evidence on factors that are essential to promoting or deterring FDI in South Asian economies.

show abstract

“…Where the regression coefficient value is 0.112 with a probability value of 0.0000 smaller than the probability α = 0.05. The estimation results are relevant to research from Hoang dan Bui (2014), Karimi et al (2013), Hakro dan Ghumro (2011), Adhikary dan Mengistu (2008). Domestic investment has a positive and significant effect on foreign direct investment in ASEAN.…”

Section: Table 1 Estimation Results Fixed Effect Modelmentioning

confidence: 72%