Determinants of Foreign Direct Investment: A Sectoral and Institutional Approach
By James Walsh, Jiangyan Yu. Social Science Research Network, 2010
318 citations recorded by the source corpus.
Using a dataset which breaks down FDI flows into primary, secondary and tertiary sector investments and a GMM dynamic approach to address concerns about endogeneity, the paper analyzes various macroeconomic, developmental, and institutional/qualitative determinants of FDI in a sample of emerging market and developed economies. While FDI flows into the primary sector show little dependence on any of these variables, secondary and tertiary sector investments are affected in different ways by countries’ income levels and exchange rate valuation, as well as development indicators such as financial depth and school enrollment, and institutional factors such as judicial independence and labor market flexibility. Finally, we find that the effect of these factors often differs between advanced and emerging economies.
Subfields: Economics and Econometrics, Finance, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/bc7ae467103d324cec47beec9d224abc8360ae62
How researchers see this paper
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In Economics and Econometrics
- Dinuk Jayasuriya
- John C. Anyanwu
- W. Baah-Boateng
- Robert Gillanders
- A. Corcoran
- C. Nevo
- Hassan Qudrat-Ullah
In Finance
In Strategy and Management
Citations in the corpus
- Improvements in the World Bank's Ease of Doing Business Rankings: Do they Translate into Greater Foreign Direct Investment Inflows? (2011, methodology): “As such, this paper follows a similar recent study undertaken on FDI flows (Walsh and Yu 2010) and uses the Arellano-Bond methodology that accounts for fixed effects in large cross-sectional and small time series panels.”
- Working Paper 136 - Determinants of Foreign Direct Investment Inflows to Africa, 1980-2007 (2011, result): “The negative significance of financial depth shows that greater financial development in African countries leads to less FDI inflows, similar to the results of Walsh and Yu (2010) and Anyanwu and Erhijakpor (2004) for more advanced economies and in accordance with a priori expectations.”