Foreign direct investment and its relationship with financial factors: linking macro with micro perspectives
type: CreativeWork
description: This thesis aims to enhance our comprehension of the intricate association between Foreign Direct Investment (FDI) and financial factors at different levels of development (Developed, Developing and Least Developed). The research undertakes a comprehensive analysis of various facets of FDI, meticulously interwoven by a unifying element of financial factors, with the objective of identifying motivations operating at both country (macro) and firm (micro). The thesis includes three empirical studies on FDI. The first empirical chapter (Chapter 4) investigates the broad four-dimensional determinants of FDI, namely economic, regulatory, institutional and financial factors. Panel data techniques and Extreme Bound Analysis (EBA) confirm that each of these factors significantly influences the FDI decision. A country genuinely seeking FDI can identify factors, such as openness to trade, inflation, economic freedom, banking sector strength among many others, and develop policies around them to increase their inflows. The chapter contributes to existing literature by expanding the realms of potential determinants across the four dimensions. The second empirical chapter (Chapter 5) extends the study by focusing on financial factors. The study employs panel data techniques along with Error Correction Model (ECM), including Mean Group (MG) and Pooled Mean Group (PMG). These models throw light on the temporal impact of potential determinants. The study shows that while economic, regulatory and institutional factors are significant in both the long and short run, financial factors are significant only in the long run. This finding is remarkable since it shows that financial factors are different from the others. Any short-term financial fluctuation is easily overlooked in the foreign investment decision, as long as long-term financial stability is achieved. The contribution of this chapter is two-fold, while it explores financial determinants, the methodology also allows it to cons…
abstract: This thesis aims to enhance our comprehension of the intricate association between Foreign Direct Investment (FDI) and financial factors at different levels of development (Developed, Developing and Least Developed). The research undertakes a comprehensive analysis of various facets of FDI, meticulously interwoven by a unifying element of financial factors, with the objective of identifying motivations operating at both country (macro) and firm (micro). The thesis includes three empirical studies on FDI. The first empirical chapter (Chapter 4) investigates the broad four-dimensional determinants of FDI, namely economic, regulatory, institutional and financial factors. Panel data techniques and Extreme Bound Analysis (EBA) confirm that each of these factors significantly influences the FDI decision. A country genuinely seeking FDI can identify factors, such as openness to trade, inflation, economic freedom, banking sector strength among many others, and develop policies around them to increase their inflows. The chapter contributes to existing literature by expanding the realms of potential determinants across the four dimensions. The second empirical chapter (Chapter 5) extends the study by focusing on financial factors. The study employs panel data techniques along with Error Correction Model (ECM), including Mean Group (MG) and Pooled Mean Group (PMG). These models throw light on the temporal impact of potential determinants. The study shows that while economic, regulatory and institutional factors are significant in both the long and short run, financial factors are significant only in the long run. This finding is remarkable since it shows that financial factors are different from the others. Any short-term financial fluctuation is easily overlooked in the foreign investment decision, as long as long-term financial stability is achieved. The contribution of this chapter is two-fold, while it explores financial determinants, the methodology also allows it to cons…
author: Kishore, P.
keywords: FDI Inflows, Financial Factors, Levels of Development, Empirical Analysis
date published: 2023
date modified: 2026-07-24T03:03:42Z
provider: Middlesex University
publisher: Networked Digital Library of Theses and Dissertations
type: WebPage
source organization: Middlesex University