The Determinants of Foreign Direct Investment: A Review and Re-Analysis of Evidence from Australia
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Verikios, George
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Abstract
Foreign direct investment (FDI) is foundational to economic growth. Despite this, the Australian empirical literature is limited. Therefore we examine the empirical determinants of Australia's inflow of FDI to understand the factors that motivate FDI. Using autoregressive distributed lag models, the study also highlights how these determinants change across time. While inward FDI can be explained by various theories it is most effectively understood by Dunning's Ownership, Locational and Internalisation framework. Therefore, the factors most important in Australia to attracting FDI are monetary policy, productivity, a competitive tax structure, labour market flexibility and costs of trade and investment.
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Australian Economic Review
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© 2021 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research. This is the peer reviewed version of the following article: The Determinants of Foreign Direct Investment: A Review and Re-Analysis of Evidence from Australia, Australian Economic Review, 2021, which has been published in final form at https://doi.org/10.1111/1467-8462.12443. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving (http://olabout.wiley.com/WileyCDA/Section/id-828039.html)
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Applied economics
Economic development policy
Econometrics
Economic theory
Social Sciences
Business & Economics
INTERNATIONAL PRODUCTION
TRADE
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Rafidi, Z; Verikios, G, The Determinants of Foreign Direct Investment: A Review and Re-Analysis of Evidence from Australia, Australian Economic Review, 2021