Foreign direct investment determinants for developing countries: a transaction cost perspective
Date
2008-03
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Abstract
This paper investigates the determinants of foreign direct investment (FDI) in developing countries from a transaction cost perspective. Based on a pooled data of 5 source countries and an average of 22 host countries for each source, regression analysis was performed. Results show that market size and wealth of both host and source countries, as well as the wealth of the host positively affects FDI inflows. Moreover, both types of transaction costs, trade and property rights transaction costs have also a significant influence in foreign investment decisions.
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Keywords
Foreign direct investment, Direct investment, Foreign investment, International trade, Trade