FACTORS AFFECTING INWARD FOREIGN DIRECT INVESTMENT: CASE OF ASEAN COUNTRIES

Gabriela Grace

Abstract


The goal of this study is to identify the determinants of foreign direct investment in members of ASEAN countries (will be known as ASEAN-9 and ASEAN-7 from 1990 to 2017 by using Pooled Least Square as the model.

The results show that market size, trade openness, infrastructure, research & development, and inflation have positive effects on inward FDI which can be considered as determinants of FDI. On the other hand, human capital and real interest rates show a negative sign.

This study also discussed the FDI trend after the global finance crisis in 2008. The results indicate that the annual trend for FDI after 2008 is positive, which means there is no big impact from the global financial crisis of 2008 on FDI inflows.

Based on the results, GDP, infrastructures, and trade openness become the important factors to attract foreign investors. Therefore, government can improve through policies, such as easing trade procedures, or improving the quantity and quality of the infrastructure.

The difference finding is found on the negative result of human capital effect on inward FDI. Thus, the quality of human resources still needs improvement because it can improve the
low-tech into high-tech destination countries for FDI.


Keywords


ASEAN, trade openness, infrastructure, human capital, crisis

Full Text:

PDF

References


Amal, Mohamed, Tomio, Bruno Thiago, & Raboch, Henrique. (2010). Determinants of Foreign Direct Investment in Latin America. GCG : Revista De Globalización, Competitividad Y Gobernabilidad, 4(3), 116-133.

Anastassopoulos, G., Georgiou, C., & Maroudas, L. (2008). Location attractiveness for Foreign Direct Investment of EU New Member? Countries in comparison with old ones. International Journal of Entrepreneurship and Innovation Management, 8(5), 506-523.

Asia-Pacific Trade and Investment Report (2015), United Nations Economic and Social Commision for Asia and The Pacific, Retrieved from UNESCAP website: https://www.unescap.org/sites/default/files/Full%20Report%20-%20APTIR%202015.pdf

Asiedu, E. (2002). On the Determinants of Foreign Direct Investment to Developing Countries: Is Africa Different? World Development, 30(1), 107-119.

Cheng, L., & Kwan, Y. (2000). What are the determinants of the location of foreign direct investment? The Chinese experience. Journal of International Economics, 51(2), 379-400.

Demirhan, E., & Masca, M. (2008). Determinants of foreign direct investment flows to developing countries: a cross-sectional analysis. Prague economic papers, 4(4), 356-369.

Dunning, J. (1981). International production and the multinational enterprise. London ; Boston: Allen & Unwin.

Dunning, J. H. (1994). Reevaluating the benefits of foreign direct investment.

Education Policy and Data Center (2019, 20 April). Data. Retrieved from Education Policy and Data Center website: https://www.epdc.org/country/vietnam

Gujarati, D., 2012, Econometrics by Example, New York: Palgrave Macmillan, pp.291-302.

Gunby, P., Jin, Y., & Robert Reed, W. (2017). Did FDI Really Cause Chinese Economic Growth? A Meta-Analysis. World Development, 90(C), 242-255.

Gwenhamo, F. (2011). Foreign Direct Investment In Zimbabwe: The Role Of Institutional And Macroeconomic Factors. South African Journal of Economics, 79(3), 211-223.

Hübler, M., & Keller, A. (2010). Energy savings via FDI? Empirical evidence from developing countries. Environment and Development Economics, 15(1), 59-80.

Kumari, R., & Sharma, A. (2017). Determinants of foreign direct investment in developing countries: A panel data study. International Journal of Emerging Markets, 12(4), 658-682.

Mahmood, H. (2018). An Investigation of Macroeconomic Determinants of FDI Inflows in Bangladesh. Academy of Accounting and Financial Studies Journal, 22(1), 1-7.

Mengistu, A., & Adhikary, B. (2011). Does good governance matter for FDI inflows? Evidence from Asian economies. Asia Pacific Business Review, 17(3), 281-299.

Ministry of Education, Youth and Sport of Cambodia. (2019, 28 April). Public Education Statistics & Indicators. Retrieved from Ministry of Education, Youth and Sport of Cambodia website: http://www.moeys.gov.kh/index.php/en/emis.html

Mottaleb, K., & Kalirajan, K. (2010). Determinants of Foreign Direct Investment in Developing Countries: A Comparative Analysis. Margin: The Journal of Applied Economic Research, 4(4), 369-404.

OECD (2009). OECD Benchmark Definition of Foreign Direct Investment 2008: Fourth Edition. OECD Publishing.

Rodríguez, X., & Pallas, J. (2008). Determinants of foreign direct investment in Spain. Applied Economics, 40(19), 2443-2450.

Singapore’s Public Data. (2019, 30 Maret). Dataset folder-Combined and Gross-enrolment rato for primary-secondary-tertiary education. Retrieved from UNCTAD website: https://data.gov.sg/dataset/combined-and-gross-enrolment-ratio-for-primary-secondary-tertiary-education

Singhania, M., & Gupta, A. (2011). Determinants of foreign direct investment in India. Journal of International Trade Law and Policy, 10(1), 64-82.

UNCTAD (2017). World Investment Report 2017: investment and the digital economy. In United Nations Conference on Trade and Development, United Nations, Geneva.

United Nations Conference on Trade and Development. (2019, 24 April). Report Folder. Retrieved from UNCTAD website: https://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx

Vogiatzoglou, K. (2008). The triad in Southeast Asia: what determines US, EU and Japanese FDI within AFTA?. ASEAN Economic Bulletin, 140-160.

World Bank (2019, 30 Maret). Indicator. Retrieved from World Bank website: https://data.worldbank.org/indicator/

Xaypanya, P., Rangkakulnuwat, P., & Paweenawat, S. (2015). The determinants of foreign direct investment in ASEAN. International Journal of Social Economics, 42(3), 239-250.




DOI: http://dx.doi.org/10.31092/jia.v3i2.588

Refbacks

  • There are currently no refbacks.




Copyright (c) 2019 INFO ARTHA

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

Our Journal has been Indexed by:

Creative Commons License

Info Artha by Publishing Unit PKN STAN is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Statistic of Visitors web
analytics View My Stats

Free counters!

Copyright © 2020, Politeknik Keuangan Negara STAN. All Rights Reserved.