The Determinants of FDI in OIC Countries

Sulaiman Sajilan, Muhammad Umar Islam, Mohsin Ali and Urooj Anwar

International Journal of Financial Research, 2019, vol. 11, issue 5, 466-473

Abstract: Foreign Direct investment (FDI) is considered to be an important source of capital especially in developing countries. FDI supplements local savings and brings a series of benefits in host countries. This research has focused OIC on countries since these countries are still far behind in attracting FDI compared to other developing countries. OIC member countries inhibit diversity in their resources from resource rich to resource poor countries. They lack behind the developed world in terms of economic development pertaining to weak economies. Since for these types of countries FDI can prove to be a vital source of capital, it becomes important to study the factors that affect it. This study exactly does the same by incorporating a series of determinants (inflation, size of the economy, trade openness, infrastructure, and institutional quality) to assess the impact they have in attracting FDI. We have used data for 42 countries spanning over 1996-2013. The choice of data selection has been dictated by data availability. For estimation we have used panel fixed effects and random effects estimators. Our results indicate that size of economy, infrastructure and trade openness are positively and significantly related in attracting FDI in those countries. Institutions on the other hand are negatively related. The effects of inflation are somewhat mixed according to our estimation and not robust. The implications of our findings are that policy makers should expend efforts in making more trade oriented policies, improve infrastructure and increase the size of economy.

Keywords: foreign direct investment; OIC; institutional quality; panel data (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciedu.ca/journal/index.php/ijfr/article/view/15690/9758 (application/pdf)
http://www.sciedu.ca/journal/index.php/ijfr/article/view/15690 (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:jfr:ijfr11:v:10:y:2019:i:5:p:466-473

DOI: 10.5430/ijfr.v10n5p466

Access Statistics for this article

International Journal of Financial Research is currently edited by Gina Perry

More articles in International Journal of Financial Research from International Journal of Financial Research, Sciedu Press
Bibliographic data for series maintained by Gina Perry ().