THE DETERMINANTS OF FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES

Marcelo Braga Nonnemberg and Mario Jorge Cardoso de Mendonça

Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32th Brazilian Economics Meeting] from ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]

Abstract: The objective of this study is to shed light on the determinants of foreign direct investiment (FDI) in developing countries. In order to undertake it, we performe a econometric model based in panel data analysis for 38 developing countries (including transition economies) for the 1975-2000 period. Among the major conclusions we have that the FDI is correlated to level of schooling, economy's degree of openness, risk and variables related to macroeconomic performance like inflation, risk and average rate of economic growth. The results also show that the FDI has been closely associated with stock market performance. Lastly, a causality test between FDI and GDP is performed. There is evidence of the existence of causality in sense that GDP leading to FDI, but not vice versa.

JEL-codes: F21 F43 F41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-afr, nep-fin, nep-ifn, nep-mfd and nep-sea
Date: 2004

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