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Examining the determinants of inward FDI: Evidence from Norway

Author

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  • Boateng, Agyenim
  • Hua, Xiuping
  • Nisar, Shaista
  • Wu, Junjie

Abstract

This paper examines the impact of macroeconomic factors on foreign direct investment (FDI) inflows in Norway under the location-specific advantage. Using cointegrating regressions with Fully Modified OLS (FMOLS) and the vector autoregressive and error correction model (VAR/VECM) on quarterly data, the study finds that the real GDP, sector GDP, exchange rate and trade openness have a positive and significant impact on FDI inflows. However, money supply, inflation, unemployment and interest rate produced significantly negative results. The results imply that in seeking to promote a dynamic competitive advantage in the home country, governments need to pay more attention to their macroeconomic policies to help fashion and reduce production and transaction costs of MNEs.

Suggested Citation

  • Boateng, Agyenim & Hua, Xiuping & Nisar, Shaista & Wu, Junjie, 2015. "Examining the determinants of inward FDI: Evidence from Norway," Economic Modelling, Elsevier, vol. 47(C), pages 118-127.
    • Handle: RePEc:eee:ecmode:v:47:y:2015:i:c:p:118-127
    DOI: 10.1016/j.econmod.2015.02.018
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    Determinants; FDI; Norway;
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