Annual data on infrastructure, government expenditure, trade openness and market size, were sourced from the world development indicators wdi of the world bank. Evidence on the determinants of foreign direct investment. Determinates of the united arab emirates foreign direct investment inflows a thesis submitted to the othman yeop abdullah graduate school of business department of finance in partial fulfillment of the requirements for the degree master of science finance universiti utara malaysia by wesam ismael hamdan bolbol universiti utara malaysia. The estimation results provide considerable support for the importance of both traditional and nontraditional factors in determining flows of foreign direct investment in a country. The research investigates the determinants of foreign direct investment fdi in nigeria over the period for 19802007. Foreign direct investment in developing countries oecd. Assessment of the impacts of foreign direct investment and. The major determinants of economic growth in the united states are total factor productivity growth, domestic investment growth, and foreign direct investment growth. Impact of foreign direct investment on economic growth of pakistan dr. Determinants, foreign direct investment, ghana, ols, sector 1. The determinants of foreign direct investment in the. On the determinants of foreign direct investment to developing countries. Pdf determinants of foreign direct investment fdi in. Foreign direct investment, developing countries, economic.
The effort of most african countries to attract fdi has not been quite successful in recent times. Pdf determinants of foreign direct investment in developing. Determinants of foreign direct investment in developing countries. The determinants of foreign direct investment empirical evidence from bahrain ahmad mohammad obeid gharaibeh assistant professor dept. Cochrane ocutt method of regression was utilized in the study. This paper has analyzed the determinants of foreign direct investment fdi to developing countries and examined why subsaharan africa ssa has been relatively unsuccessful in attracting fdi despite policy reform.
Indeed, good institutions are supposed to exert their positive in. The investment is made to acquire a lasting financial interest in a foreign enterprise and the investor holds interest of 10 percent or more of the equity capital. Despite economic and institutional reform in africa during the past decade, the flow of foreign direct investment fdi to the region continues to be disappointing. Determinants of bank foreign direct investment inflow in. Blonigen university of oregon jeremy piger university of oregon abstract.
Determinants of foreign direct investment inflow in tanzania. The determinants of foreign direct investment in the african. Determinants of foreign direct investment and its impact on economic growth in developing countries. By bridging the gap between domestic savings and investment and bringing the latest technology and management knowhow from developed countries, foreign direct investment fdi can play an. Faculty of management, university of tehran, qom college, iran email. Natasha ristovska, aleksandra stoilkovska, and ivona ravlikj. Investigating the determinants of foreign direct investments in namibia jones s. This paper attempts to assess the determinants of foreign direct investment fdi in china and its effects on the whole economy. Working paper 6 determinants of foreign direct investment. The determinants of foreign direct investment in transition economies alan a. Pdf determinants of foreign direct investment in sri lanka. The determinants of foreign direct investmentempirical. The determinants and impacts of foreign direct investment.
Some country experiences in investment promotion in africa 24 3 investment policies, institutional framework and effects 28 investment incentives 28 the mining sector and foreign direct investment 34 the free zones scheme and fdi flows 40 privatisation and fdi 41 4 empirical specifications and estimation of the econometric approach 45. Examining the determinants of foreign direct investment core. On the determinants of foreign direct investment to. The dynamics and determinants of foreign direct investment. Pdf determinants of foreign direct investment in ethiopia. Introduction a foreign direct investment fdi is an investment made by a company or entity based in one country, into a company or entity based in another country. A comparative analysis khondoker abdul mottaleba kaliappa kalirajanb abstract by bridging the gap between domestic savings and investment and bringing the latest technology and management knowhow from developed countries, foreign direct investment fdi can play an. He is summed that foreign direct investment trade are. Causal relationships between foreign direct investment growth and economic growth is unidirectional, running from foreign direct investment to economic growth. A sectoral and institutional approach prepared by james p. This working paper should not be reported as representing the views of the imf. This is despite the perceived and obvious importance of fdi in the economic growth and development of a country. The extant theoretical and empirical literature on determinants of fdi yields the following broad propositions2.
Fdi flow into telecommunication sector, foreign exchange rate, interest rate and inflation. This paper investigates the determinants of foreign direct investment in nigeria. Foreign direct investment is the capital transaction that a direct investor carries out in a foreign direct investment enterprise affiliate to obtain a lasting interest in this foreign firm and a we are grateful to isabel busom and rosina moreno for comments and suggestions. The zimbabwe investment centre zic was established as a one stop shop for fdi mobilisation. This type of investment occurs when a firm invests to produce a product.
The findings indicate that exchange rate economic factor and political instability are the crucial determinants of fdi in nigeria. Determinants of foreign direct investment international monetary. The role of foreign direct investment in the development of nigerian economy cannot be over emphasized. According to demirhan and masca 2008, fdi has significantly grow due to several factors, namely rapid technological progress. Determinants of foreign direct investment in ethiopia. While fdi flows into the primary sector show little dependence on any of these variables, secondary and tertiary sector investments are affected in different ways by. Determinants of foreign direct investment a tale of nine theoretical models. Determinants of fdi by isomorphic pressures adopted from francis and zheng 2009 francis and zheng 2009 identified nine levels of pressure called isomorphic pressure figure 1, which may lead to the selection of foreign direct investment. This study considers 20 developing countries from the whole of south, east and southeast asia. After presenting the main theoretical contributions and the previous works done about chinas inwardfdi, an empirical study has been implemented extending the previous ones with a different data set more recent and with different methodologies. Download this paper open pdf in browser add paper to my library. China has experienced high foreign direct investment fdi inflows for the past 30 years since it opened its door to foreign investors especially after the early 1990s.
The keywords foreign direct investment and africa yielded ten papers on fdi determinants to africa, which are the object of the present paper. In section 3, we examine recent studies that analyze the relation between fdi and several economic factors. This paper investigates the determinants of foreign direct investment in sri lanka and evaluates the attractiveness of india, sri lanka, bangladesh and pakistan for foreign direct investment. Foreign direct investment is one of the economic concepts that are seen as the determinants of econo mic development of the countrie s in the context of the market economy. A dozen or so years later, foreign investment is still clearly increasing, contributing to the regions growing importance in the world. Integration of a single market helped to create a dynamic process of free movement of goods, services, and free flow of capital and, as a result, attracted more foreign direct investment fdi. Determinants of foreign direct investment biswas 2002. By estimating the effects of the determinants of foreign direct investment fdi in 29 chinese regions from 1985 to 1995, we. Using a panel dataset of bilateral flows of foreign direct investment fdi, we study the determinants of fdi from western countries, mainly in the european union eu, to central and eastern european ones. The views expressed in this working paper are those of the authors and do not necessarily represent. Determinants of foreign direct investment in the nigerian. Institutional determinants of foreign direct investment such link could be seen as one channel through which institutions promote productivity growth. What are the determinants of the location of foreign. Scribd is the worlds largest social reading and publishing site.
Nyambe the department of economics, university of namibia, pbag 301 windhoek, namibia abstract foreign direct investments are a challenge to attract, good to. Foreign direct investment provides capital for it investment, enhances job creation and managerial skills, and possibly technology transfer. Empirical studies of bilateral foreign direct investment fdi activity show substantial differences in specifications with little agreement on the set of covariates that are or should be included. Jan 01, 2002 foreign direct investment in southern africa. Anyanwu is a lead research economist, development research department, african development bank j. C52,f21,f23 abstract empirical studies of bilateral foreign direct investment fdi activity show substantial differences in specifications with little agreement on the set of covariates that are or should be included. The effect of education was positive but not statistically signi. Determinants of foreign direct investment in india. Determinants of foreign direct investment blonigen. Foreign direct investment fdi flows in thecis during 19952010. Pdf determinants of foreign direct investment in india. Investment incentives 28 the mining sector and foreign direct investment 34 the free zones scheme and fdi flows 40 privatisation and fdi 41 4 empirical specifications and estimation of the econometric approach 45 variable specifications 45 regression results 50 5 survey outcomes and implications 56 introduction 56 determinants of investment 58. Our main interest is to study how different variables or indicators reflecting trade, fiscal and financial sector liberalization attract fdi in pakistan. The determinants of foreign direct investment oecd working papers on international investment selected studies on international investment and investment policy prepared for use within the oecd.
The determinants of chinese outward foreign direct investment. Determinants of foreign direct investment in developing. Joe muzurura midlands state university zimbabwe abstract the role played by fdi as a source of capital which augments domestic savings is attracting close attention in. Determinants of foreign direct investment and its impact on. Determinants of foreign direct investment in australia.
Impact of foreign direct investment on economic growth of. Determinants of foreign direct investment in ghana. Csae, university of oxfordcrefsa, london school of. Pdf this paper attempts to study the determinant of fdi in ethiopia for the time period from 19812007. This paper examines the determinants of foreign direct investment fdi in nigeria during 1980 2011. The determinants of foreign direct investment into european. Among the noneconomic factors, there are several problems regarding the identification of relevant fdi determinants. Lipsey 1994 illustrated the effect of outward foreign direct investment upon a countrys balance of payments and the employment of its works force. Walsh and jiangyan yu july 2010 abstract this working paper should not be reported as representing the views of the imf. Empirical studies of bilateral foreign direct investment fdi activity show substantial differences in speci. Pdf the role played by fdi as a source of capital which augments domestic savings is attracting close attention in all developing countries. In addition, the government introduced market driven interest rates, tariffs, tax and export rebates. The objective of this study is to shed light on the determinants of foreign direct investiment fdi in developing countries.
Munich personal repec archive the determinants and impacts of foreign direct investment accolley, delali 21 october 2003 online at. Pdf the main aim of this study is to investigate the relationship among foreign direct investment and institutions in emerging markets. Determinants of foreign direct investment in kenya. We use bayesian statistical techniques that allow one to select from a large set of candidates those variables most likely to be determinants of fdi activity. This study will examine the determinants of foreign direct investment fdi based on empirical evidence from nigeria. Determinants of foreign direct investment in iran seyed mohammad alavinasab, ph. Since the mid1980s, the world economy has experienced a rapid increase of fdi even faster than for world output or world trade. Bevan and saul estrin centre for new and emerging markets, london business school abstract using a panel dataset containing information on fdi flows from market to transition economies, we. Openness of a country is generally measured as the proportion of.
The determinants of foreign direct investment into. Perfect competition within the industries implies that there are numerous. Working papers on international investment number 20004 main determinants and impacts of foreign direct investment on chinas economy december 2000 this study has been prepared within the framework of the oecd cooperation programme with the peoples republic of china in the area of foreign direct investment. Foreign direct investment fdi is commonly defined as a crossboarder investment made by an enterprise directly in a production facility andor in the marketing of a product. Foreign direct investment inflow determinants have become an important topic not only for policy makers and the government but also for academic researchers and this has arisen due to the failure performance of the previous policies which have been implemented to attract more foreign direct investment in the country. Determinants of foreign direct investment fdi in zimbabwe. Najia saqib1, maryam masnoon2 and nabeel rafique3 abstract given contrasting evidence in the literature pertaining to the impact of foreign direct investment on the host countrys economy, we take the case of pakistan and test the said association for this nation. It aimed at determining functional relationships that exist between gdp, wage rate, interest rate and relative openness index, and the extent to which each variable. Use the free adobe acrobat reader to view this pdf file. Lower trade barriers, liberalization of foreign investment regimes and advanced technology have. Determinants of foreign direct investment from eu15 countries in. Determinants of foreign direct investment in africa steve onyeiwu. Foreign direct investment fdi undertaken by mnes to serve a local market in a host country is called horizontal fdi.
As a result, with more and more foreign invested enterprises in china, china has experienced dramatic changes in its economy and society. Macroeconomic determinants of foreign direct investment. The main aim of this study is to investigate the longrun. Economy investment on chinas impacts of foreign direct main. The influence of foreign direct investment on the economic development. The results indicate that the factors that drive fdi to developing countries have a different impact on fdi to ssa. Strategies and determinants of foreign direct investment fdi.
The purpose of this paper is to identify key determinants of foreign direct investment fdi inflows in developing countries by using unbalanced panel data set pertaining to the years 19902012. Introduction global economic integration in recent years has been on an increase, which has led to a substantial growth in the flows of foreign direct investment. We find the most important influences to be unit labor costs, gravity factors, market size, and proximity. Determinants of foreign direct investment inflows to africa, 19802007 john c. The determinants of foreign direct investment in transition. This study investigates the determinants of chinese outward direct investment odi and the extent to which three special explanations capital market imperfections, special ownership advantages and institutional factors need to be nested within. Institutional determinants of foreign direct investment. They often emphasize the economic ones, while underestimating the others. The purpose of the contemporary research was the examination of macroeconomic determinants of foreign direct investment inflows into postconflict sierra leone for the period, 20022015, and whether the determinants have a longrun and shortrun association with fdi. The paper empirically identifies the determinants of growth in foreign direct investment fdi in pakistan over the period 1961 to 2003. Foreign direct investment fdi is one of the indicators of the increased interdependence among economies. In order to undertake it, we performe a econometric model based in panel data analysis for 38 developing countries including transition economies for the 19752000 period. The generalized investment theory on us foreign direct investment then is tested empirically utilizing panel data for 44 countries from 1983 to 1990.
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