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

Author

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  • Tampakoudis Ioannis A.

    (School of Business of Business Administration, Department of Business Administration, University of Macedonia, Thessaloniki, Greece)

  • Subeniotis Demetres N.
  • Skouloudakis Manolis I.

    (School of Business Administration, Department of Business Administration, University of Macedonia, Thessaloniki, Greece)

  • Kroustalis Ioannis G.

    (School of Economic and Regional Studies, Department of Balkan, Slavic and Oriental Studies, University of Macedonia, Thessaloniki, Greece)

Abstract

The determinants of FDI have been examined extensively in the literature; however, the empirical findings are inconclusive and often diverging. Developing and emerging countries have attracted the bulk of FDI inflows since the early 2000s, subsequently improving their economic level. Nevertheless, many middle-income countries got stuck in the middle-income trap, failing to make the transition to the high-income level. The study investigates the effects of certain determinants on FDI inflows to middle-income countries, with respect to avoiding the middle-income trap. We employ a panel data analysis for fifteen middleincome countries gathering data from 1980 onwards. The results highlight the significance of trade openness, GDP and population growth on inward FDI, while financial development, inflation, infrastructure and fuel exports are found to be insignificant. Empirical findings may force governments to apply policies in certain areas, with the aim of attracting further FDI while at the same time escaping the middle-income trap.

Suggested Citation

  • Tampakoudis Ioannis A. & Subeniotis Demetres N. & Skouloudakis Manolis I. & Kroustalis Ioannis G., 2017. "Determinants of Foreign Direct Investment in Middle-Income Countries: New Middle-Income Trap Evidence," Mediterranean Journal of Social Sciences, Sciendo, vol. 8(1), pages 58-70, January.
    • Handle: RePEc:vrs:mjsosc:v:8:y:2017:i:1:p:58-70:n:63
    DOI: 10.5901/mjss.2017.v8n1p58
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    Cited by:

    1. Nicolas Papadopoulos & Yara Ibrahim & Alessandro De Nisco & Maria Rosaria Napolitano, 2018. "The Role of Country Branding in Attracting Foreign Investment: Country Characteristics and Country Image," MERCATI & COMPETITIVIT?, FrancoAngeli Editore, vol. 2018(2), pages 85-108.

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