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Direct foreign investment and its determinants: a case study

Makun, Keshmeer (2016) Direct foreign investment and its determinants: a case study. Economia Internazionale, 69 (2). pp. 151-174. ISSN 0012-981X

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The intent of this paper is to determine short-run and long-run relations among foreign direct investment and its potential determinants using cointegration and error correction reaction model for Fiji Islands over the period 1980-2013. The modern time series quantitative technique of bounds test for cointegration is employed. Bounds test approach is applicable even though the underlying series are integrated of different order. The calculated F-statistics of bound test were checked against the appropriate critical values. The long-run and short-run coefficient is calculated using autoregressive distributed-lag (ARDL) approach. We found that there are significant positive impact of gross domestic product, trade openness and negative impact of GDP per capita, exchange rate and political instability on FDI inflow in Fiji; while level of infrastructure development, inflation and financial markets have no impact on its FDI inflow. This study is the first attempt in specifically examining various factors that influence direct foreign investment in Fiji Islands. Given Fiji’s receptiveness to direct foreign investment in light of falling aid, the findings of this paper have useful policy implications.

Item Type: Journal Article
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Divisions: Faculty of Business and Economics (FBE) > School of Economics
Depositing User: Keshmeer Makun
Date Deposited: 02 Jun 2020 23:49
Last Modified: 05 Aug 2020 03:15

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