MACROECONOMIC FACTORS OF FDI INFLOWS IN ASIAN ECONOMIES: A STUDY OF 14 ASIAN COUNTRIES

The study conducted to analyze the relationship between foreign direct investment and macroeconomic factors, which were affecting foreign direct investment in Asian economies over the period of 2003 to 2017. The fixed effect model applied in order to anticipate the foreign direct investment inflow into the overall Asian economies and simple regression analysis organized for each economy individually to determine the foreign direct investment inflow. The result of the fixed effect model presented strong evidence that trade openness has a statistically significant and affirmative association with foreign direct investment inflow into different Asian economies. On the other hand, exchange rate found closer to significance with foreign direct investment inflow. However, the macroeconomic variables of the study jointly and significantly affected foreign direct investment inflow. The results of simple regression analysis found that GDP, trade openness, and exchange rate have a significant impact on foreign direct investment inflow in China, Indonesia, Jordan, Pakistan, and Vietnam. Meanwhile, labor cost and tax rate have positive significance to foreign direct investment in Hong Kong and Philippines. The conclusive remarksare that macroeconomic factors played a significant and decisive role to attract foreign direct investment in the Asian region and in each country as well.