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Item Restricted Foreign direct investment and the Philippine macroeconomic environment 1997-2006(2008-01) Adan, Sarah Elizabeth B.; Cruz, Vida Marie E.Attracting foreign direct investment (FDI) has been a priority of the present and previous governments. Investing in an economy is key to promoting economic growth and reducing poverty. Thus, various policies have been implemented to encourage foreign and domestic investors. It is important that factors that attract FDI be present in the country while factors that discourage FDI be lessened or eliminated. Using foreign direct investment flows as the dependent variable, regression analysis was carried out to identify the factors that encourage or discourage FDI. The explanatory variables used are the following: nominal GDP growth rate, headline inflation rate, real exchange rate of the Philippine peso to the US dollar, 91-day Treasury Bill rate, budget deficit, and the stock index. Quarterly data from the year 1996 to year 2007 were used for the dependent and explanatory variables. The results indicated that the GDP growth rate, inflation rate, exchange rate, and stock index are positively correlated with FDI flows, while the t-bill rate and the budget deficit are found to be insignificant in explaining FDI.