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An Analysis of the Relationship Between Foreign Direct Investment and Sociopolitical Factors via the Use of Panel Regression

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  • BETÜL GÜR

    (Ýstanbul Ticaret Üniversistesi Ticari Bilimler Fakültesi Ýktisat Bölümü)

Abstract

Competitiveness has arisen between countries especially those that have inadequate internal resources because of the attention foreign direct investment has received in financing their development. Those developing countries that have been able to successfully create an environment which is attractive to the foreign investor have enjoyed a higher place among all other developing countries The foreign investor takes into account factors such as economic and political condition of the home country, its labor market and technological infrastructure to make the least costly and most profitable investment while taking as little risk as possible. Especially in the last five years sociopolitical factors have become important in the decision making process. The aim of this study is to analyze the relationship between direct foreign investment (FDI) and sociopolitical factors such as political risks, indices of perceived corruption, humanitarian development, risk of terror and multidimensional poverty. The relationship will be brought forth and interpreted via panel regression analysis. The study conducted about developing countries over the years 2010-2014 has demonstrated that all the independent factors with the exception of the index of multidimensional poverty have had a statistically meaningful effect on FDI.

Suggested Citation

  • Betül Gür, 2016. "An Analysis of the Relationship Between Foreign Direct Investment and Sociopolitical Factors via the Use of Panel Regression," Eurasian Eononometrics, Statistics and Emprical Economics Journal, Eurasian Academy Of Sciences, vol. 3(3), pages 43-55, January.
    • Handle: RePEc:eas:econst:v:3:y:2016:i:3:p:43-55
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    More about this item

    Keywords

    Foreign Direct Investment; Panel Regression Analysis; Political Risk; Perceived Corruption Index; Human Development Index; The Terrorism Risk Index; Multidimensional Poverty Index;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications

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