Analysis of Determinants of Foreign Investment in Developing Countries Post COVID-19 Pandemic

Aditya Halindra; Faridah Yuningsih

Authors

Aditya Halindra Faculty of Economics, Muhammadiyah College of Economics, Tuban, Indonesia
Faridah Yuningsih Muhammadiyah College Of Economics, Tuban, Indonesia

Keywords:

Foreign Direct Investment (FDI), Developing Countries, COVID-19 Pandemic, Economic Policy, Political Stability

Abstract

This study aims to analyze the factors influencing foreign direct investment (FDI) in developing countries in the post-COVID-19 pandemic period. A mixed-methods approach is used by combining quantitative and qualitative analysis. Secondary data were collected from reports of international institutions such as UNCTAD, the World Bank, and the IMF, while primary data were obtained through interviews with economists, policy makers, and foreign investors. The results of the regression analysis show that economic policies and political stability have a significant influence on FDI flows, while infrastructure and labor quality, although positive, are not statistically significant. Qualitative analysis reveals that flexibility in economic policies and efforts to improve political stability are key factors considered by investors. This study suggests that developing countries should strengthen economic policies and create a stable political environment to increase the attractiveness of foreign investment.

References

Asiedu, E. (2002). On the Determinants of Foreign Direct Investment to Developing Countries: Is Africa Different?. World Development, 30(1), 107-119.

Blonigen, B. A., & Piger, J. (2014). Determinants of Foreign Direct Investment. Canadian Journal of Economics, 47(3), 775-812.

Creswell, J. W., & Plano Clark, V. L. (2018). Designing and Conducting Mixed Methods Research. SAGE Publications.

Dunning, J. H. (1993). Multinational Enterprises and the Global Economy. Addison-Wesley.

Lipsey, R. E. (2002). Home and Host Country Effects of FDI. NBER Working Paper No. 9293.

Narula, R. (2020). Policy Opportunities and Challenges from COVID-19 for Economies with Large Informal Sectors. Journal of International Business Policy, 3(3), 302-310.

UNCTAD. (2021). World Investment Report 2021. United Nations Publication.

IMF. (2020). World Economic Outlook: A Long and Difficult Ascent. International Monetary Fund.

World Bank. (2020). Global Economic Prospects. World Bank Group.

Hymer, S. (1976). The International Operations of National Firms. MIT Press.

Rugman, A. M. (1981). Inside the Multinationals: The Economics of Internal Markets. Columbia University Press.

Markusen, J.R. (2002). Multinational Firms and the Theory of International Trade. MIT Press.

Vernon, R. (1966). International Investment and International Trade in the Product Cycle. Quarterly Journal of Economics, 80(2), 190-207.

Barro, R. J., & Sala-i-Martin, X. (2004). Economic Growth. MIT Press.

Aitken, B. J., & Harrison, A. E. (1999). Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela. American Economic Review, 89(3), 605-618.