Determinants of Foreign Direct Investment in ASEAN

P.R. Bhatt

Foreign Trade Review, 2008, vol. 43, issue 3, 21-51

Abstract: The ASEAN region has become one of the most attractive investment locations in the developing world. It attracted FDI to the tune of US$19 billion in 2003. Among ASEAN countries, Singapore topped the list with US$11 billion FDI inflows followed by Malaysia (US$2.5 bn), Brunei (US$.0 bn), and Vietnam (USÉ 5 bn) in 2003. An attempt has been made in this paper to understand the determinants of FDI in ASEAN. The empirical model is estimated for five countries of ASEAN and ASEAN region as a whole for the period 1976-2003. The estimation of the model shows that there is a positive influence of the size of the economy (GNI) on FDI inflows in the case of Indonesia and Singapore. The infrastructure is significant for Indonesia and Malaysia in attracting FDI. Exchange rate had influence on FDI for Malaysia. The openness of the economy was significant in attracting FDI for Indonesia. The model is estimated for panel data of ASEAN region by pooled least square method and fixed effect model. In the case of pooled least square method, gross national income (GNI) is very significant and having expected sign. This implies that market size attracted FDI in the ASEAN region. The depreciation of the currency attracted FDI inflows in ASEAN as indicated by the variable XR which is significant with negative sign. Infrastructure is another significant variable in this model. Openness variable is significant but negative sign. When the model was estimated by fixed effect model it is found that all variables are significant with expected sign except in the case of the variable openness.

Keywords: ASEAN; gross national income; infrastructure; openness; panel data (search for similar items in EconPapers)
Date: 2008
References: Add references at CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0015732515080302 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:fortra:v:43:y:2008:i:3:p:21-51

DOI: 10.1177/0015732515080302

Access Statistics for this article

More articles in Foreign Trade Review
Bibliographic data for series maintained by SAGE Publications ().