The Determinants of Foreign Direct Investment Flows: Evidences from ASEAN Member Countries

Abstract

ASEAN has become the bold destination today for the international investors with its high capacity of achieving more FDI inflows. The major issue for this consideration should focus on the determinants that the region has achieved during the past few years. This paper mainly analyses the determinants of foreign direct investment inflows to the ASEAN. The issues of macroeconomic policies, market size, openness of economy, labor cost, political stability, inflation rate, financial development and infrastructure development  are taken into account when considering the determinants in attracting FDI inflows. This was examined with the data of each country taken in year 2002 to 2012. It was confirmed that the region has realized each of these factors and it has attracted investment inflows with those advantages. It illustrates that the openeess of economy, along with some other factors, is an important factor attracting FDI along with. Also finally it supplies the policy recommendations to attract more FDI inflows to the region.