Attracting foreign direct investment in southeast Asia : the impact of risk perceptions and trade openness.

• Main Author: Oliveros Jurise Athena Pulgo.
• Other Authors: Leonard Christopher Sebastian
• Format: Theses and Dissertations
• Language: English
• Published: 2013
• Subjects: DRNTU::Humanities
• Online Access: http://hdl.handle.net/10356/55161
• Institution: Nanyang Technological University

The long-term economic benefits of foreign direct investment (FDI) have prompted most countries in the Asian region to revamp their policies towards a more appealing environment for foreign investment. With that the region has become one of the largest recipients of foreign direct investment. However study reveals distribution of FDI inflow remains unequal. This particular study aims to determine the factors why the developing Southeast Asian countries remained a laggard in terms of attracting foreign investment. It is assumed that the more non-traditional factors or the efficiency factors as oppose to traditional market and resource factors will reveal the underlying reason why inward FDI distribution is disproportionate. Using a sample of 60 observations from five Southeast Asian countries, covering the period from 1996-2010, the study tested various political, financial and social variables that are predicted to affect FDI. The regression results show that inward FDI towards developing Southeast Asian countries are significantly efficiency-seeking, which entails that they are highly responsive to factors that drives the overall investment environment within recipient country. Specifically the study found strong impact of trade openness, political stability, government effectiveness, official exchange rate and debt service in the inflow of foreign direct investment. The study henceforth recommends cooperative action at the regional level and policy reform and governance improvement at the domestic level.