Pull Factors of FDI: A Cross-Country Analysis of Advanced and Developing Countries

Indrajit Roy () and K. Narayanan ()
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Indrajit Roy: Reserve Bank of India
K. Narayanan: Indian Institute of Technology Bombay

Chapter Chapter 2 in Globalisation of Technology, 2018, pp 13-46 from Springer

Abstract: Abstract In a cross-country bilateral FDI flow setup, we examine macroeconomic determinants of FDI flow to advanced economies (AE) from AE, to AE from developing economies (DE), to DE from AE and to DE from DE. It is observed that determinants vary significantly across these broad groups. Further, we construct composite index based on these macroeconomic determinants and rank the countries within these broad groups of FDI flow to understand macroeconomic enabler in the host country which attract FDI. We also propose a new methodology to circumvent multicollinearity issue which arises as selected determinants of FDI are found to be interrelated.

Keywords: Multicollinearity Issues; Host Country; Multinational Enterprises (MNEs); United Nations Conference On Trade And Development (UNCTAD); Final Composite Index (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:spr:isbchp:978-981-10-5424-2_2

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DOI: 10.1007/978-981-10-5424-2_2

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