Foreign Direct Investment Determinants in OECD and Developing Countries |
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| Authors: | Fotini Economou Christis Hassapis Nikolaos Philippas Mike Tsionas |
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| Institution: | 1. Centre of Planning and Economic Research, Athens, Greece;2. Department of Economics, University of Cyprus, Nicosia, Cyprus;3. Department of Business Administration, University of Piraeus, Piraeus, Greece;4. Lancaster University Management School, LA1 4YX and Athens University of Economics and Business, Greece |
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| Abstract: | In this paper we examine the foreign direct investment (FDI) inflow determinants in 24 Organisation for Economic Co‐operation and Development (OECD) and 22 developing (non‐OECD) countries over 1980–2012, using the standard fixed effects as well as a dynamic panel approach. The most robust finding is that lagged FDI, market size, gross capital formation and corporate taxation significantly affect FDI inflows in OECD countries. We also examine a group of developing countries, taking into consideration the increased share of world FDI inflows that developing countries have attracted, and compare the results. In this case, lagged FDI, market size, labor cost and institutional variables provide the most robust results. The empirical results have important policy implications indicating the factors that host economies should emphasize in order to attract FDI inflows. |
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