Identifying the robust economic, geographical and political determinants of FDI: an Extreme Bounds Analysis

Chanegriha, Melisa; Stewart, Chris; Tsoukis, Christopher

doi:10.1007/s00181-016-1097-1

Identifying the robust economic, geographical and political determinants of FDI: an Extreme Bounds Analysis

Chanegriha, Melisa; Stewart, Chris; Tsoukis, Christopher

Authors

Melisa Chanegriha

Chris Stewart

Christopher Tsoukis c.tsoukis@keele.ac.uk

Abstract

Understanding what determines Foreign Direct Investment (FDI) inflows remains a primary concern of economists and policy makers; yet the uncertainty surrounding FDI theories and empirical approaches has created ambiguity regarding the determinants of FDI. This paper applies Extreme Bounds Analysis to identify the robust determinants of FDI using panel data covering 168 countries from 1970 to 2006. We consider 58 potential economic, geographic and political determinants and find that almost one-third are robust, including: openness, education, government spending, corporate tax rate, infrastructure, experience of conflict, democratic governance, natural resources, geographic location, number of borders, coastal location and language.

Journal Article Type	Article
Acceptance Date	Apr 5, 2016
Online Publication Date	Jun 9, 2016
Publication Date	2017-03
Journal	Empirical Economics: a quarterly journal of the Institute for Advanced Studies, Vienna
Print ISSN	0377-7332
Publisher	Springer
Peer Reviewed	Peer Reviewed
Volume	52
Issue	2
Pages	759-776
DOI	https://doi.org/10.1007/s00181-016-1097-1
Keywords	Foreign Direct Investment, Extreme Bounds Analysis, Panel data Economic, geographic and political determinants
Publisher URL	http://dx.doi.org/10.1007/s00181-016-1097-1