FDI and Natural Resource Rents: Evidence from Eight Post-Communist Countries

Manuchehr Irandoust (manuch.dost@gmail.com)
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Manuchehr Irandoust: Independent Researcher, Sweden

Journal of Economic Development, 2022, vol. 47, issue 2, 67-79

Abstract: This study examines the long-run relationship between foreign direct investment (FDI), trade openness, and natural resource rents in Transcaucasian and Central Asian post-communist countries. The paper deals with cross-sectional dependence, homogeneity restrictions, and panel unit root tests. The departure from earlier studies of the role of natural resources in attracting FDI is in the asymptotic theory of likelihood-based panel cointegration allowing for multiple cointegrating vectors. The results reveal that the variables cointegrate in six countries out of eight under review. This implies that natural resource rents and trade openness promote FDI. Policy implications and legal aspects are discussed.

Keywords: Foreign Direct Investment; Natural Resource Rents; Likelihood-Based Panel (search for similar items in EconPapers)
JEL-codes: C20 F23 F41 (search for similar items in EconPapers)
Date: 2022
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