Economic sentiment indicators and foreign direct investment: Empirical evidence from European Union countries

Andrzej Cieślik and Mahdi Ghodsi

International Economics, 2021, issue 168, 56-75

Abstract: This paper studies the role of business sentiment in the decisions of multinational enterprises (MNEs) to undertake foreign direct investment (FDI) across European Union (EU) member states. Based on the knowledge-capital model, the study employs the Pseudo Poisson Maximum Likelihood (PPML) estimator and panel data to examine empirically the determinants of FDI across EU member states during the period 2003–2017. The empirical evidence suggests that better economic sentiment in an EU Member State induces MNEs to undertake FDI in that country, while worse economic sentiment in an EU member state motivates an MNE in that country to invest abroad.

Keywords: Economic sentiment; Factor endowments; Foreign direct investment; Multinational enterprise; Market size; EU Member states (search for similar items in EconPapers)
JEL-codes: F21 F23 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.sciencedirect.com/science/article/pii/S2110701721000469 (text/html)

Related works:
Journal Article: Economic sentiment indicators and foreign direct investment: Empirical evidence from European Union countries (2021)
Working Paper: Economic Sentiment Indicators and Foreign Direct Investment: Empirical Evidence from European Union Countries (2021)
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:cii:cepiie:2021-q4-168-5

Access Statistics for this article

More articles in International Economics from CEPII research center Contact information at EDIRC.
Bibliographic data for series maintained by ().