A Comparative Analysis of FDI Inflows into Emerging and Advanced Economies

Abstract

The aim of this paper is to test the hypothesis that the inward foreign direct investment (FDI) flows of countries may be considered as a function of country specific characteristics in macroeconomic, development and institutional variables. The models developed identifies the main determinants of inflows using panel data over a time period of 1996-2018 for ten emerging economies and ten advanced economies. The models indicate that macroeconomic variables are the most important determinants in emerging economies, while development and institutional variables are more prominent factors for inflows into the advanced economies. In general, the results verify that FDI inflows is influenced by national characteristics, but the nature of characteristics changes along with the level of a country’s development