Korea Trade Review (무역학회지)

Korea Trade Research Association (한국무역학회)
권호 표지
DOI QR코드

DOI QR Code

An Analysis on the Facilitating Factors of Foreign Direct Investment Inflows - Focusing on National Macro Socio-Economic Factors of Developing Countries by Continent -

해외직접투자 유입의 촉진 요인 분석 - 대륙별 개발도상국 거시 사회·경제변수를 중심으로 -

  • Kim, Moo-Soo (Department of Trade, Dongkuk University) ;
  • Lee, Chan-Hee (College of Business Administration, Sungkyunkwan University)
  • Received : 2019.05.24
  • Accepted : 2019.06.24
  • Published : 2019.06.30
Download PDF
⟨ Previous Next ⟩

Abstract

This study investigates the facilitating factors of FDI (foreign direct investment) inflows in 15 developing countries of three continents (Asia, Latin America, and Africa) using fixed-effect panel regression analysis with 30-year macro socio-economic data. The facilitating factors of FDI inflows in each continent differed. In Asia, labor compensation, GDP, consumer expenditure, human capital, and export facilitated FDI inflows in decreasing order, as did export, total factor productivity, GDP, and human capital in Latin America, and investment expenditure, human capital, government expenditure, and export in Africa. Most importantly, the character of cost saving efficiency-seeking investment was very strong in Asia. Also, third-party export-oriented investment and economic growth-oriented investment were shown in Latin America and Africa, respectively.

Keywords

References

  1. Arbatli, E. (2011), "Economic Policies and FDI Inflows to Emerging Market Economies", IMF Working Paper, No.11/192.
  2. Asiedu, E. (2005), "Foreign Direct Investment in Africa: The Role of Natural Resources, Market Size, Government Policy, Institutions and Political Instability", Working Paper, RP2005/24.
  3. Athukorala, P. (2009), "Trends and Patterns of Foreign Direct Investments in Asia: A Comparative Perspective", Journal of Applied Economic Research, 3(4), 365-408.
  4. Barro, R. J. and J. W. Lee (2010), "A New Data Set of Educational Attainment in the World, 1950-2010", NBER Working Paper, No 15902.
  5. Botello, J. C. and M. Davila (2016), "How to Increase FDI Flows: A Demonstration of the New Determinant Creation Theory for Mexico and Chile", Journal of Business and Retail Management Research, 11, 386-398.
  6. Brenner, T. (2014), "The Impact of Foreign Direct Investment on Economic Growth: An Empirical Analysis of Different Effects in Less and More Developed Countries", Working papers on Innovation and Space, Philipps university of Marburg.
  7. Caselli, F. and D. J. Wilson (2004), "Importing Technology", Journal of Monetary Economics, 51(1), 1-32. https://doi.org/10.1016/j.jmoneco.2003.07.004
  8. Caves, D. W., L. R. Christensen and W. E. Diewert (1982a), "The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity", Econometrica, 50(6), 1392-1414.
  9. Caves, D. W., L. R. Christensen and W. E. Diewert (1982b), "Multilateral Comparisons of Output, Input and Productivity Using Superlative Index Numbers", Economic Journal, 92(365), 73-86. https://doi.org/10.2307/2232257
  10. Cho, Taek-Hee (2008), "Analysis on the Determinants of FDI Using Stationary Panel Data in Korea by Industry", Journal of Economics Studies, 26(2), 77-105.
  11. Diewert, W. E. and C. J. Morrison (1986), "Adjusting Outputs and Productivity Indexes for Changes in the Terms of Trade", Economic Journal, 96, 659-679. https://doi.org/10.2307/2232984
  12. Djurovic, A. B. (2012), "The impact of Foreign Direct Investment on the Economic Growth of Developing Countries", Economic Development, 2(3), 160-175.
  13. Dunning, J. H. (1993), Multinational Enterprises and the Global Economy, Wokingham, England and Reading, Mass.; Addison Wesley.
  14. Dunning, J. H. (1998), "Location and Multinational Enterprise: A Neglected Factor?", Journal of International Business Studies, 29(1), 45-66. https://doi.org/10.1057/palgrave.jibs.8490024
  15. Dunning J. H. (2002), Determinants of Foreign Direct Investment: Globalization Induced Changes and the role of FDI policies, World Investment Prospects, Economist Intelligence Unit, London.
  16. Engle, R. F. and C. W. J. Granger (1987), "Co-Integration and Error Correction: Representation, Estimation, and Testing", Econometrica, 55(2), 251-276. https://doi.org/10.2307/1913236
  17. Feenstra, R. C., R. Inklaar and M. P. Timmer (2013), The Next Generation of the Penn World Table, Mimeo, available at: www.ggdc.net/pwt.
  18. Gollin, D. (2002), "Getting Income Shares Right", Journal of Political Economy, 110(2), 458-474. https://doi.org/10.1086/338747
  19. Hong, Seung-Gee and Moo-Soo Kim (2018), "A Study on Facilitation Factors of Foreign Direct Investment Inflows in the World: Focusing on National Macro Socio-Economic Factors", Journal of Korea Trade, 43(2), 47-67.
  20. Jung, Young-Chul (2011), A Study on the Characteristics and Economic Effects of Inward Direct Investment in Korea, Graduate School Inje University.
  21. Kang, Han-Gyoun (2010), "Determinants and Promotive Plans of Attracting Inward Direct Investment in Korea Using Knowledge-Capital Model", Korean Journal of Business Administration, 23(6), 3015-3029.
  22. Ko, Suk-Nam (2006), "What has Caused Inconsistent Empirical Results in the Determinants of FDI?", Journal of Industrial Economics and Business, 19(3), 1051-1070.
  23. Lewis, G. (2000), "Factors Influencing Foreign Direct Investment in Lesser Development Countries", Park Place Economist, 7(1), 99-107
  24. Masron, T. A. and H. Abdullah (2010), "Institutional Quality as a Determinant for FDI inflows: Evidence from ASEAN", World Journal of Management, 2(3), 115-128.
  25. Masron, T. A. and E. Nor (2013), "FDI in ASEAN-8: Does Institutional Quality Matter?", Applied Economics Letters, 20(2), 186-189. https://doi.org/10.1080/13504851.2012.687090
  26. Murthy, K. V. B. and M. K. Sinha (2016), "Inward Foreign Direct Investment and Economic Development of Developed Countries: Panel Regression Approach", Journal of Applied Finance, 22(4), 55-75.
  27. Nunnerkamp, P. (2002), "Determinants of FDI in Developing Countries: Has Globalization Changed the Rules of the Game?", Kiel Working Paper, 1122.
  28. Pattayat, S. S. (2016), "Examining the Determinants of FDI Inflows in India", Theoretical and Applied Economics, 23(2), 225-238.
  29. Psacharopoulos, G. (1994), "Returns to Investment in Education: A Global Update", World Development 22(9), 1325-1343 https://doi.org/10.1016/0305-750X(94)90007-8
  30. Rutihinda, C. (2005), "Determinants of Foreign Direct Investments in Less Developed Countries: A Factor Analysis Approach", Journal of International Business and Economy, 1-14.
  31. Sankaran, C. (2015), "An Analysis of the Determinants of FDI Inflows: The Case of the Dominican Republic", Journal of Applied Economics, 14(1), 47-68.
  32. Schwert, G. W. (1987), "Effects of Model Specification on Tests for Unit Roots in Macroeconomic Data", Journal of Monetary Economics, 20, 73-103. https://doi.org/10.1016/0304-3932(87)90059-6
  33. Sethi, D., S. Guisinger, S. Phelan and D. Berg (2003), "Trends in Foreign Direct Investment Flows: A Theoretical and Empirical Analysis", Journal of International Business Studies, 34(4), 315-326. https://doi.org/10.1057/palgrave.jibs.8400034
  34. Tran, T. A. D. and T. T. B. Dinh (2014), "FDI Inflows and Trade Imbalances: Evidence from Developing Asia", European Journal of Comparative Economics, 11(1), 147-169.
  35. Wadhwa, K. and S. Reddy (2011), "Foreign Direct Investment into Developing Asian Countries: The Role of Market Seeking, Resource Seeking and Efficiency Seeking Factors", International Journal of Business and Management, 6(11), 219-226.
  36. Yeo, Taek-Dong and Min-Hwan Lee (2009), "A Study on the Features and Determinants of Foreign Direct Investment in Korea", Journal of Korea Trade, 34(4), 339-367.