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Determinants of FDI inflows to developing countries: a panel data analysis

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  • Khachoo, Ab Quyoom
  • Khan, Mohd Imran

Abstract

The aim of this paper is to identify, by estimating a panel econometric model, the factors determining FDI inflows to developing countries over a long period. The study is based on a sample of 32 developing countries. In our analysis, FDI inflows are modeled as a function of the market size, total reserves, infrastructure, labour cost and degree of openness for the host countries. Using data from 1982 to 2008, a panel data estimator suggests that the market size, total reserves, infrastructure and labour costs are the main determinants of FDI inflows to developing countries.

Suggested Citation

  • Khachoo, Ab Quyoom & Khan, Mohd Imran, 2012. "Determinants of FDI inflows to developing countries: a panel data analysis," MPRA Paper 37278, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:37278
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    References listed on IDEAS

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    Cited by:

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    5. Sushil K. Rai & Akhilesh K. Sharma, 2020. "Causal Nexus Between FDI Inflows and Its Determinants in SAARC Countries," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 21(2), pages 193-215, September.
    6. Sirin, Selahattin Murat, 2017. "Foreign direct investments (FDIs) in Turkish power sector: A discussion on investments, opportunities and risks," Renewable and Sustainable Energy Reviews, Elsevier, vol. 78(C), pages 1367-1377.
    7. Peter Ajonghakoh Foabeh & Vesarach Aumeboonsuke, 2024. "Resilience of Developing Economies to External Shocks: Empirical Evidence from CEMAC Countries," Journal of Sustainable Development, Canadian Center of Science and Education, vol. 17(3), pages 1-81, May.
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    9. Bohan Zhang & Jianfu Ma & Muhammad Asghar Khan & Valentina Repnikova & Kseniia Shidlovskaya & Sergey Barykin & Muhammad Salman Ahmad, 2023. "The Effect of Economic Policy Uncertainty on Foreign Direct Investment in the Era of Global Value Chain: Evidence from the Asian Countries," Sustainability, MDPI, vol. 15(7), pages 1-21, April.
    10. Sebastian Tocar, 2018. "Determinants Of Foreign Direct Investment: A Review," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 21, pages 165-196, June.
    11. Helmi Hammami & Moez Hammami & Siriki Coulibaly & Mariem Marzouk, 2020. "Determinants of FDI attractiveness: A MCI model approach," Economics Bulletin, AccessEcon, vol. 40(2), pages 1033-1048.
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    13. Manuel Fernandez & Mariam Mohamed Almaazmi & Robinson Joseph, 2020. "Foreign Direct Investment in Indonesia: An Analysis from Investors Perspective," International Journal of Economics and Financial Issues, Econjournals, vol. 10(5), pages 102-112.
    14. Manuel Fernandez & Aysha Abdulla Ahmed Aljeed Alnuaimi & Robinson Joseph, 2020. "FDI Environment in China: A Critical Analysis," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(5), pages 238-253, October.
    15. Shah, Mumtaz Hussain & Zeb, Aisha, 2017. "Prudent Macro Management of the Economy and Inward FDI in ASEAN Member States," MPRA Paper 107249, University Library of Munich, Germany.
    16. Vida Varahrami & Arghavan Novin Vajari, 2019. "FDI, Government Budget and Efficiency of Public Infrastructure Capital," International Journal of Economic Sciences, International Institute of Social and Economic Sciences, vol. 8(2), pages 148-158, December.

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    More about this item

    Keywords

    FDI Inflows; Fully Modified Ordinary Least Squares (FMOLS); Pedroni’s Panel Cointegration Methodology; Developing Countries;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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