Foreign Direct Investment according to different countries’ stages of Human Development

João Oliveira (), Francisco Martins () and Elísio Brandão ()
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João Oliveira: FEP-UP, School of Economics and Management, University of Porto
Francisco Martins: FEP-UP, School of Economics and Management, University of Porto
Elísio Brandão: FEP-UP, School of Economics and Management, University of Porto

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: This investigation studies Foreign Direct Investment determinants with a framework different from the major research present in the literature related to FDI. Its aim is to study and give insights into the reported differences in FDI determinants in the literature. This framework uses thirteen pillars as FDI determinants, which are synthesized recurring to a wide spectre of variables representing nations’ characteristics selected from literature namely from The World Competitiveness Reports of The World Economic Forum. The results of the econometric models estimated by GLS, with data from 186 countries, indicate significant differences on FDI determinants according to the different human development stage; therefore policies regarding FDI attraction must be shaped according to the stage of human development of each country and the specific determinants. The effect of the recent financial crisis in investors decisions regarding FDI was also studied using a structural change test. The results indicate that there was a significant shift in FDI flows.

Keywords: Foreign Direct Investment; Determinants; Human Development Index Levels; Principal Component Analysis; Taxes. (search for similar items in EconPapers)
JEL-codes: C38 F21 O15 O57 (search for similar items in EconPapers)
Pages: 68 pages
Date: 2017-09
New Economics Papers: this item is included in nep-cse and nep-int
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