Determinants of FDI attractiveness: A MCI model approach

Helmi Hammami (1) , Moez Hammami (2) , Siriki Nahoua Coulibaly (2) , Mariem Marzouk (2)

1 ESC [Rennes] - ESC Rennes School of Business
2 Quantylix

This study aims to use a Multiplicative Competitive Interaction approach to identify the major factors that influence the decision to engage in foreign direct investment (FDI) by focusing on the ease of doing business index and its subindexes (institutional quality) and GDP (market size). Results are drawn from an annual dataset on 175 countries between 2005 and 2015. Empirical findings suggest institutional effect dominates market size effect, and therefore, to be more competitive in attracting FDI, countries must increase their business environment's efficiency by mainly focusing on judicial system improvement.

Mots clés: Foreign direct investment; Multiplicative Competitive Interaction (MCI) model; market size; business environment; fiscal policy

Domaines: Économie et finance quantitative [q-fin]

Helmi Hammami, Moez Hammami, Siriki Nahoua Coulibaly, Mariem Marzouk. Determinants of FDI attractiveness: A MCI model approach. Economics Bulletin, 2020, 40 (2), pp.1033-1048. ⟨hal-02898195⟩