Determinants of Foreign Direct Investment in Developing Countries: A Panel Data Analysis

Abstract

The aim of this paper is to explore, by estimating a panel data econometric model, the determining factors of foreign direct investment (FDI) inflows in developing countries over the period of 1990-2007. The study is based on a sample of panel data on 25 developing countries. In the model, dependent variable is FDI inflows. Independent variables are FDI outflows, GDP, BOP, population, openness of the economy, mobile, internet, technology, ODA and labor. According to the econometric results, in the main model, openness of the economy, market size, availability of labour force, ODA, mobile, technology and internet have positive effects on FDI inflows in developing countries.