Determinants of foreign direct investment and its relationship to economic growth
type: CreativeWork
description: Foreign Direct Investment (FDI) has been widely treated in a specific way or as part of strategy theories, in definition and in econometric models and has also been studied in many different aspects and approaches. This dissertation first embarks on a wide ranging review of theories of variables; it then empirically explores and studies the various economic, political and geographical determinants of FDI in the world economy. It also includes an assessment of the relationship between FDI and economic growth. To achieve that, this thesis incorporates into the theoretical models more than 56 variables that are standard in the economic literature to capture the economic political and geographical determinants of FDI. Rather than relying on specific theories of FDI determinants, we take an agnostic stance and examine them all simultaneously under a united eclectic framework .This work is based on a new panel data set that covers 168 countries located in different world regions of the world for the period 1970-2006. No previous study covers and analyses such a wide range of fundamentals in such a large dataset. We first analyse the determinants of FDI using standard panel methods. Then we employ the recent extreme bounds analysis (EBA) approach, of Learner (1985), Sala-i-Martin (1997) which is imperfect but useful method to deal with model uncertainty. We apply this approach where we account for all possible combinations of explanatory factors to identify “robust” determinants of FDI. To the best of our knowledge, this approach has not been applied before within such large datasets to examine the robustness of the determinants of FDI. Indeed, the majority of applications of EBA are in the growth literature. The findings significantly outperform existing ones as endogeneity bias and model uncertainty are controlled for in that context. Among the main conclusions, we show that FDI inflows depends on market size and market growth, established bilateral trade, openness of th…
abstract: Foreign Direct Investment (FDI) has been widely treated in a specific way or as part of strategy theories, in definition and in econometric models and has also been studied in many different aspects and approaches. This dissertation first embarks on a wide ranging review of theories of variables; it then empirically explores and studies the various economic, political and geographical determinants of FDI in the world economy. It also includes an assessment of the relationship between FDI and economic growth. To achieve that, this thesis incorporates into the theoretical models more than 56 variables that are standard in the economic literature to capture the economic political and geographical determinants of FDI. Rather than relying on specific theories of FDI determinants, we take an agnostic stance and examine them all simultaneously under a united eclectic framework .This work is based on a new panel data set that covers 168 countries located in different world regions of the world for the period 1970-2006. No previous study covers and analyses such a wide range of fundamentals in such a large dataset. We first analyse the determinants of FDI using standard panel methods. Then we employ the recent extreme bounds analysis (EBA) approach, of Learner (1985), Sala-i-Martin (1997) which is imperfect but useful method to deal with model uncertainty. We apply this approach where we account for all possible combinations of explanatory factors to identify “robust” determinants of FDI. To the best of our knowledge, this approach has not been applied before within such large datasets to examine the robustness of the determinants of FDI. Indeed, the majority of applications of EBA are in the growth literature. The findings significantly outperform existing ones as endogeneity bias and model uncertainty are controlled for in that context. Among the main conclusions, we show that FDI inflows depends on market size and market growth, established bilateral trade, openness of th…
author: Chanegriha, Melissa
keywords: 330 Economics
date published: 2012-09
date modified: 2026-07-24T02:54:44Z
provider: London Metropolitan University
publisher: Networked Digital Library of Theses and Dissertations
type: WebPage
source organization: London Metropolitan University