How Changing Investment Climate Impacts on the Foreign Investors Investment Decision: Evidence from FDI in Germany

Denis Kotov ()

MPRA Paper from University Library of Munich, Germany

Abstract: In the paper we have analysed how the changing investment climate influences investment decisions of German investors. The basic idea of our concept is a treatment of investment climate conditions as a number of factors which negatively contribute to the foreign investors’ decisions. Using statistics on FDI and aggregate indicators describing the institutional (level of corruption, protection of property rights) and macro-economical (foreign exchange rates and consumer prices dynamics) environment for the period from 1998 to 2005 we have examined the impact of the investment climate conditions on FDI inflows from Germany to the countries of BRIC, G8 and some members of EU. By controlling for FDI in BRIC countries we have shown that these states represent less attractive investment destinations for German FDI despite being viewed as the future’s most promising economies. German investors still prefer exporting rather than investing in BRIC emerging markets.

Keywords: Investment Climate; FDI; BRIC; G8 (search for similar items in EconPapers)
JEL-codes: D73 F21 (search for similar items in EconPapers)
Date: 2008-05-15
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Citations: View citations in EconPapers (3)

Published in Proceedings of the International Conference on Applied Economics 2008 (2008): pp. 547-553

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:8777

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