Determinants of Foreign Direct Investment in Iceland

Helga Kristjánsdóttir ()

No 2005-15, CAM Working Papers from University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics

Abstract: This paper investigates whether the low foreign direct investment in Iceland can be explained by its geographical location together with market size measures. The effects of these factors on inward FDI are analyzed by means of the gravity model. The model is also applied to analyze sector, trade bloc and country specific effects. The research is based on panel data, running over countries, sectors and years. Results indicate that distance negatively affects FDI and that FDI appears to be more driven by wealth effects than market size effects.

Keywords: foreign direct investment; gravity model (search for similar items in EconPapers)
JEL-codes: F21 F23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec and nep-ifn
Date: 2005-09
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