Determinant factors to attract FDI inflows in developed and developing countries

Abstract

This paper studies key factors and determinants of Foreign Direct Investment inflows in developed and developing countries with the highest rate of FDI inflows as percentage of its GDP. Therefore, this dissertation tries to explain some of the most important macroeconomic variables that influence multinational enterprises investment decissions, taking into account the previous literature of this topic. Through three empirical models, with data of 33 countries in different time lapses, the results show that the most important factors that influence the FDI inflows (positively and negatively) are the market size of the host country, the labour costs, the tax levels and the skill levels of the labour force.