Publicação

FDI determinants in developing countries: a firm-level analysis

Detalhes bibliográficos
Resumo:	Foreign direct investment (FDI) has been an important driver of economic growth in developing countries. Between 2005 and 2017, FDI grew significantly in developing countries as the corresponding global growth rate of FDI inflows is around 32 percentage points higher than the world growth rate. The purpose of this paper is to analyze FDI determinants at the firm level in developing countries. Using a sample of 96,826 firms from 125 countries between 2005 and 2017, we adopt a fractional logit regression, a more suitable estimation method for addressing the FDI variable. The micro-level results show that exports, investment, and human capital have a statistically positive impact on FDI inflows, while credit barriers and taxes have a negative effect. Also, market size and resources foster FDI, whereas inflation and environmental emissions lower foreign investment levels. This study demonstrates that governments wishing to attract FDI should adopt a variety of policies, including the promotion of international trade and measures that boost investment and human capital in firms and ease the access to credit.
País:	Portugal
Tipo de documento:	other
Tipo de acesso:	Restrito
Instituição associada:	Repositório Aberto da Universidade do Porto
Idioma:	inglês
Origem:	Repositório Aberto da Universidade do Porto

_version_	1850560655231287296
conditionsOfAccess_str	restricted access
country_str	PT
description	Foreign direct investment (FDI) has been an important driver of economic growth in developing countries. Between 2005 and 2017, FDI grew significantly in developing countries as the corresponding global growth rate of FDI inflows is around 32 percentage points higher than the world growth rate. The purpose of this paper is to analyze FDI determinants at the firm level in developing countries. Using a sample of 96,826 firms from 125 countries between 2005 and 2017, we adopt a fractional logit regression, a more suitable estimation method for addressing the FDI variable. The micro-level results show that exports, investment, and human capital have a statistically positive impact on FDI inflows, while credit barriers and taxes have a negative effect. Also, market size and resources foster FDI, whereas inflation and environmental emissions lower foreign investment levels. This study demonstrates that governments wishing to attract FDI should adopt a variety of policies, including the promotion of international trade and measures that boost investment and human capital in firms and ease the access to credit.
documentTypeURL_str	http://purl.org/coar/resource_type/c_1843
documentType_str	other
id	23697eb1-c4e2-4f6c-9fc5-06229391b329
identifierHandle_str	https://hdl.handle.net/10216/141582
language	eng
relatedInstitutions_str_mv	Repositório Aberto da Universidade do Porto
resourceName_str	Repositório Aberto da Universidade do Porto
spellingShingle	FDI determinants in developing countries: a firm-level analysis
title	FDI determinants in developing countries: a firm-level analysis