Determinants of Foreign Direct Investment in Developing Countries Cynthia Ortega, Jamie Haime, Francesca Ioffreda, Kyle Ragins.

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Presentation transcript:

Determinants of Foreign Direct Investment in Developing Countries Cynthia Ortega, Jamie Haime, Francesca Ioffreda, Kyle Ragins

Factors Considered Population Population Labor Force Labor Force Literacy Rates (Education) Literacy Rates (Education) GDP Growth Rate GDP Growth Rate Unemployment Rate Unemployment Rate Inflation Rate Inflation Rate External Debt (Risk) External Debt (Risk) Internet Users (Tech) Internet Users (Tech) Freedom Index (Openness) Freedom Index (Openness) Percent of paved roads (Infrastructure) Percent of paved roads (Infrastructure) Dependent Variable (Y) FDI flows

The Data Set

Summary Statistics

Regression Analysis

Model Y(FDI) = (POP) (EDU) (UNEMP) (INFL) (RISK) (TECH) (OPEN) 7 X Variables -- all statistically significant Inflation and Risk opposite expected signs

Multicollinearity PopulationEducationUnemploymentInflationRiskTechnologyOpenness Population1 Education Unemployment Inflation Risk Technology Openness

Heterskedasticity Park test resulted in the following p- values Park test resulted in the following p- values POP EDU UNEMP INFL RISK TECH OPEN

Conclusions Significant correlations with between FDI and the following variables Significant correlations with between FDI and the following variables PopulationPopulation Literacy RatesLiteracy Rates Unemployment RateUnemployment Rate Inflation RateInflation Rate External Debt (Risk)External Debt (Risk) Internet Users (Tech)Internet Users (Tech) Freedom Index (Openness)Freedom Index (Openness) Can’t make a statement about causality, especially with inflation and risk, as signs are opposite expected Can’t make a statement about causality, especially with inflation and risk, as signs are opposite expected Future analysis might concentrate on developing an effective model for FDI per capita and going beyond linear regressions towards more complex relationships Future analysis might concentrate on developing an effective model for FDI per capita and going beyond linear regressions towards more complex relationships