Determinants of foreign direct investment in emerging markets: an empirical study of FDI flows from Germany and its banking sector
Emerging markets frequently feature strong economic growth but also unique risks - political instability, legal uncertainty and corruption - which constitute barriers to foreign direct investment (FDI). This study analyzes empirically whether superior investment profiles of recipient countries matter for German FDI in addition to typical determinants such as labor costs, level of income and market openness. The specifics of banking FDI are also examined, notably the impact of incipient banking crises abroad and the risk-mitigating property of multilateral development banks acting as stakeholders in individual FDI projects. The concluding part highlights recent initiatives of international organizations to lower investment barriers, fight corruption and strengthen financial system stability.
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General Introduction to the Investigation
Course of the Investigation
Index of Tables
52 other sections not shown
abroad adjusted AGGLO Asia Asian assets average banking crises banking markets banking sector bilateral capital capital-at-risk coefficient corporate corruption country risk country's crisis currency debt default rates developing countries domestic dummy early warning economic emerging markets empirical equity estimation exogenous variables expropriation Extreme Bounds Analysis factors FDI flows FDI inflows FDI projects FDI stocks financial markets financial sector FINCTR firms foreign bank foreign direct investment foreign investors GDPCAP German banking FDI German FDI Heckman host country incentives indicators institutions Latin America macroeconomic measure Moshirian multilateral development bank multinational negative number of observations OECD outcome political risk political risk insurance positive propensity score PRSCRISK R-Squared ratio real exchange rate region regression regulatory RERVOL restrictions robust sample countries selection selection bias significant statistics sub-sample Table trade transition countries treatment effect UNCTAD unit labor costs World Bank