Determinants of foreign direct investment (FDI) in Asian economies: An auto regressive distributed lag (ARDL) modelling approach

The study analyses the determinants of net inward FDI for four Asian countries, China, Japan, India, and Korea by considering the generic FDI theory models like Flying Geese Model and Eclectic theory. It considers GDP growth rate, Inflation (proxy for economic stability), Nominal exchange rate and R...

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Bibliographic Details
Main Authors: Chowdhury, Piyali Roy, Anuradha, A.
Format: Conference Proceeding
Language:English
Subjects:
Error correction
Independent variables
Online Access:Get full text
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Summary:The study analyses the determinants of net inward FDI for four Asian countries, China, Japan, India, and Korea by considering the generic FDI theory models like Flying Geese Model and Eclectic theory. It considers GDP growth rate, Inflation (proxy for economic stability), Nominal exchange rate and Real interest rate (proxy for cost of capital) as the independent variables. The paper finds the existence of a long run cointegration between FDI inflow, GDP growth rate, Inflation and exchange rate using ARDL model with significant Error Correction Terms for all four countries. However, the analysis finds out that no specific set of common variables help to determine FDI for all the countries. The study concludes that a country specific FDI model may be better fit than a generic FDI theory-based model.
ISSN:0094-243X
1551-7616
DOI:10.1063/5.0156724