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Title: An analysis of the main location determinants of FDI in developing and transition economies
Author: Mamatkulov, Ilkhom
ISNI:       0000 0004 6349 2516
Awarding Body: University of Aberdeen
Current Institution: University of Aberdeen
Date of Award: 2016
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This thesis aims to investigate a variety of dimensions of the relationship between foreign direct investment (FDI) and economic growth in developing and transition economies. The main purpose of this thesis is to examine empirically the location determinants of FDI, and its effect on economic growth and domestic investment. The purpose of the first chapter is to assess empirically the main location determinants of FDI, particularly focusing on non-classical factors of FDI, such as institutional quality and agglomeration effects, using a sample of 54 developing and transition economies from Asia, Latin America, Sub-Saharan Africa and Eastern Europe over the period 1997 to 2011. High quality of institutions, the existing level of FDI (persistence effect), market size, infrastructure development and the openness of host economy to international trade are shown as main driving factors to FDI inflow to the host economy. Using dynamic system GMM model helps to take into account endogeneity, simultaneity, heteroscedasticity and autocorrelation issues. The second empirical chapter examines, within a new growth theory framework, the role that FDI plays in the growth process in the context of 49 developing and transition economies characterised by different absorptive capacities for 1997-2011. The results for the two-step system GMM model show that FDI stock affects negatively on economic growth in the long run. The host economies start facing positive effects of FDI on their long run economic growth when they meet a certain level of threshold with respect to several absorptive capacities, such as open international trade policies, sufficient levels of human capital and infrastructure development. Finally, the third empirical chapter assesses the extent to which FDI in 53 developing and transition economies crowds in or crowds out domestic investment over the period 1997-2011. The results of dynamic system GMM model indicate that FDI stimulates domestic investment, supporting the “crowd-in-hypothesis”. Also, the study finds out significantly positive correlation of output growth rate to domestic investment, supporting the accelerator theory. Moreover, this chapter studies that the stock of domestic investment, financial system development, trade openness of the host economy to international trade and high quality of institutions encourage other individuals to start their businesses in the host country. The study has also shown that macroeconomic instability measured by high inflation rate reduces domestic investment in the country.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: Foreign Investments