Title : Factors Affecting International Capital Flows to Developing Economics: Panel Data Approach

Authors : Md. Kamal Uddin, Md. Sharif Hossain and Md. Masudur Rahman

Abstract : Foreign Direct Investment (FDI) has a long been considered to be conductive to the economic growth of developing countries partly owing to its relative immobility and consequent high stake in the long-term profitability. One of the important hypothesis is that FDI inflow is positively related with the marginal returns of foreign capital. In this paper we have addressed the question of determinants specially focusing the marginal return issue of foreign direct investment inflow into developing countries. After surveying both the theoretical and empirical litterateurs, we estimated our empirical model. We use panel data approach taking data from 8 Asian countries. Estimation results show that among other factors, inflow of FDI is positively related with the marginal productivity of foreign capital in the host economy. It is also found that some factors have differentials impact on different economies indicating that inflow is also related to the level of economic development of concerned economy. Policy makers could increase the inflow offering attractive pull factors specially taking measures that would offer higher productivity of foreign investment.

Journal : Journal of Marketing Volume : 9 Year : 2006 Issue : 1
Pages : 1-15 City : Edition : Editors :
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