Examining the determinants of inward FDI: Evidence from Norway

Agyenim Boateng, Xiuping Hua, Shaista Nisar, Junjie Wu

    Research output: Contribution to journalArticle

    Abstract

    This paper examines the impact of macroeconomic factors on foreign direct investment (FDI) inflows in Norway under the location-specific advantage. Using cointegrating 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 and reduce production and transaction costs of MNEs.
    Original languageEnglish
    Pages (from-to)118-127
    Number of pages10
    JournalEconomic Modelling
    Volume47
    Early online date7 Mar 2015
    DOIs
    Publication statusPublished - Jun 2015

    Keywords

    • impact of macroeconomic factors
    • foreign direct investment
    • FDI
    • Norway
    • macroeconomic policies

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