An empirical study of FDI determinants: a panel data analysis of South and South-east Asia

Ahmed Beloucif, Mohammad Shaiful Islam, Tahar Boukhobza

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Abstract

This paper explores and compares the determinants of Foreign Direct Investment (FDI) in South and South-east Asia over 21 periods ranging from 1996 to 2016. Using panel data regression with random effects and fixed effects models, the study finds that market size, labour productivity and infrastructure of the host country exercise a significant influence upon FDI inflows of both regions. Trade openness, inflation rate, natural resource endowment and the unemployment rate are more important in South Asia, while the exchange rate, control of corruption and political stability are more important in South-east Asia for foreign investors. It appears that foreign investors hold different perceptions of investment attributes while deciding investment location into these two regions. The results
imply that in seeking to become a potential destination of FDI, policies for both regions should be devised towards market growth, political stability, and the development of the quality of infrastructure, human capital and labour productivity.Sound macroeconomic stability with a flexible and stable exchange rate system is also needed to attract FDI.
Original languageEnglish
Title of host publicationProceedings of the 2020 British Academy of Management Annual Conference
PublisherBritish Academy of Management
Number of pages21
Publication statusAccepted/In press - 8 Jun 2020
EventBritish Academy of Management 2020 Conference in the Cloud: Innovating for a Sustainable Future - Virtual
Duration: 2 Sep 20204 Sep 2020
https://www.bam.ac.uk/civicrm/event/info?id=3638

Conference

ConferenceBritish Academy of Management 2020 Conference in the Cloud
Abbreviated titleBAM2020
Period2/09/204/09/20
Internet address

Keywords

  • FDI
  • determinants
  • FDI inflows
  • panel data
  • South and South-east Asia

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    Beloucif, A., Islam, M. S., & Boukhobza, T. (Accepted/In press). An empirical study of FDI determinants: a panel data analysis of South and South-east Asia. In Proceedings of the 2020 British Academy of Management Annual Conference British Academy of Management.