In this paper, the authors discuss whether political stability would influence Foreign Direct Investment （FDI） inflow. There is an increasing interest among scholars about FDI since it has been considered as a way t...In this paper, the authors discuss whether political stability would influence Foreign Direct Investment （FDI） inflow. There is an increasing interest among scholars about FDI since it has been considered as a way to offer abundant foreign capital, high skills, and new jobs throughout developing countries. Foreign companies pay more attention to the institutional properties and time horizon of the government leader. From historical experience, autocratic countries attract more FDI because of their flexibility and powerfulness. Hence, the research assumes that political stability as well as other factors like GDP, OMI, and interest rate probably would increase FDI inflow. Stata and Eviews have been used for regressing the independent variables and dependent variable. Correlation between each individual variable was calculated, and Least Squares method was used for investigating whether the linear correlation is significant. Finally, carefully analysing each indicator and ploting the graphs, things were found that there is no significant correlation between political stability factors of a country and FDI inflow. There are several explanations about the failure of hypothesis. First, the 10-year span is not long enough to prove the relationship. Then, the countries picked are most on the transition from autocracies to democracies. All the factors might influence the result of the correlation. Specific external factors such as economic conditions of investors need to be explored to see if it would probably determine the strong or weak of FDI.展开更多
文摘In this paper, the authors discuss whether political stability would influence Foreign Direct Investment （FDI） inflow. There is an increasing interest among scholars about FDI since it has been considered as a way to offer abundant foreign capital, high skills, and new jobs throughout developing countries. Foreign companies pay more attention to the institutional properties and time horizon of the government leader. From historical experience, autocratic countries attract more FDI because of their flexibility and powerfulness. Hence, the research assumes that political stability as well as other factors like GDP, OMI, and interest rate probably would increase FDI inflow. Stata and Eviews have been used for regressing the independent variables and dependent variable. Correlation between each individual variable was calculated, and Least Squares method was used for investigating whether the linear correlation is significant. Finally, carefully analysing each indicator and ploting the graphs, things were found that there is no significant correlation between political stability factors of a country and FDI inflow. There are several explanations about the failure of hypothesis. First, the 10-year span is not long enough to prove the relationship. Then, the countries picked are most on the transition from autocracies to democracies. All the factors might influence the result of the correlation. Specific external factors such as economic conditions of investors need to be explored to see if it would probably determine the strong or weak of FDI.
