Examining the Determinants of Inward FDI: Evidence from Norway
This paper examines the impact of macroeconomic factors on foreign direct investment (FDI) inflows in Norway under the location-specific advantage. Using co-integrating regressions with Fully Modified OLS (FMOLS) and the vector autoregressive and error correction model (VAR/VECM) on quarterly data, the study finds that the real GDP, sector GDP, exchange rate and trade openness have a positive and significant impact on FDI inflows. However, money supply, inflation, unemployment and interest rate produced significantly negative results. The results imply that in seeking to promote a dynamic competitive advantage in the home country, governments need to pay more attention to their macroeconomic policies to help fashion, reduce production and transaction costs of MNEs.
Citation : Boateng, A., Hua, X., Nisar, S. and Wu, J. (2015) Examining the Determinants of Inward FDI: Evidence from Norway. Economic Modelling, 47, pp. 118-127
ISSN : 0264-9993
Research Institute : Finance and Banking Research Group (FiBRe)
Peer Reviewed : Yes