Heterogenous panel modeling on foreign direct investments in E7 countries

Abstract

With the spread of free economy conditions, the increase in the international mobility of capital has led to an increase in the number of economies that want to attract capital and the opportunities it will provide. In addition to this, capital owners have started to use free movement opportunities in order to maximize their own benefits. In this context, the factors affecting foreign direct investments including long-term capital flows have been the subject of many empirical studies. In this study which is carried out within the scope of the annual data of E7 economies for the period of 1992-2021, it is aimed to reveal the relationships between net foreign direct investment inflows and unemployment, liberal democracy, public expenditures, foreign direct investment outflows and short-term borrowing. In the study, in which the heterogeneous panel data method based on seemingly unrelated regression analysis was used, it was determined that the realizations under the influence of the selected independent variables differed by countries, but it was found that all the variables included in the analysis had a decisive role on foreign direct investment inflows.