A comparison of FDI determinants in ASEAN3 and ASEAN5 countries: New evidence from financial integration factor analysis

Foreign direct investment (FDI) contributes greatly to the economic development of the receiving country by providing an important source of finance for development and acting as a channel for the transfer of capital and new technology. On the one hand, FDI adds to the stock of domestic capital and increases the productivity of production factors such as raw materials and labor. On the other hand, FDI also contributes to diversifying the economy by adding new economic actors and promoting competition to produce better products at lower prices in the host country. The literature has indicated that FDI inflows are determined by the market size, the degree of openness, the role of institutional factors and degree of economic integration. Besides, other factors such as labor costs, infrastructure, domestic tax rates, and institutional environment are correlated significantly with FDI inflows. Many studies about the factors were influenced by foreign direct investment inflows in developing countries as well as developed countries. However, none of the research articles compare FDI determinants in ASEAN3 and ASEAN5 with the new issue of the financial integration factor measured by the KAOPEN index to see whether or not it has an impact, along with other factors, on attracting FDI inflows in ASEAN3 and ASEAN5 member countries. Therefore, in this study, the author conducts a "a comparison of FDI determinants in ASEAN3 and ASEAN5," focusing on the new issue of the financial integration measure by KAOPEN index and a reexamination of the impact of other factors such as gross domestic product, infrastructure facility, trade openness, labor costs, interest rate, institutional stability, and exchange rate to FDI inflows. The author uses the quantitative research strategies by the panel ordinary least square estimation with the method of first differencing to address the critical research question and research hypotheses of this study. There are three stages of this study. In the first stage, the author identifies factors influencing FDI inflows in ASEAN countries. In the second stage, the author uses econometric models to give concrete empirical evidence. And in the third stage, the author draws a conclusion based on findings from the econometric models. The author also includes an interview conducted with experts on the impact of these factors on attracting FDI in ASEAN member countries, which can help policymakers improve the FDI attraction of ASEAN member countries as well the FDI attraction of Vietnam. This study collected data from eight ASEAN member countries during two financial crises from 1996 to 2016. The author divides ASEAN member countries into two groups, ASEAN3 and ASEAN5, based on their level of economic development. The findings indicate that the coefficient of financial integration is positive and statistically significant at a 1% level of significance on FDI capital inflows. The empirical results also support the hypothesis that foreign direct investment in ASEAN3 and ASEAN5 is positively correlated to market size and 4 infrastructure facilities, and negatively correlated to labor costs as well as trade openness in ASEAN3.

ISBN:	978-80-7454-924-3
EAN:	9788074549243
Počet stran	43 stran
Datum vydání	17. 09. 2020
Pořadí vydání	První
Jazyk	anglický
Vazba	e-kniha - pdf
Autor:	Thanh Tri Ho
Nakladatelství	Univerzita Tomáše Bati ve Zlíně
Tématická skupina	999 - nezařazeno
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