Browsing by Author "King, Karl Edward Capuchino"

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    The determinants of foreign direct investment in Asia
    (2009-04-03) King, Karl Edward Capuchino; Reyes, Noel Ricardo Ocampo; Reside, Renato
    This study attempts to quantify the determinants of FDI in selected Asian countries from the different Asian Regions. The model uses Ordinary Least Squares regression and puts the claim forward that Foreign Direct Investment in a country is determined by its market size both actual and potential, its openness or outward orientation, its infrastructure, its state of political risk, and its exchange rate volatility. Real GDP and its growth rate are taken as proxies for actual market size and potential market size. On the other hand, roads are used as a proxy for infrastructure. Lastly, openness is measured by the sum of a country’s exports and imports as a percentage of its GDP. The OLS estimation results show that indeed, actual market size and openness are significant determinants of FDI. However, the results also show that potential market size and exchange rate volatility are not significant, although both possess the incorrect sign. Also, it is found that infrastructure and political risk are significant determinants, although with effects contrary to what is expected.