Foreign Direct Investment in Emerging Markets, Investment Climate and Innovative Growth

Abstract

Main goal of the research is to elicit the determinants of FDI inflows and identify the relationship between FDI, investment climate and innovative growth. Key tasks include estimating whether investment climate as a complex indicator is a good predictor of the change in FDI inflows, and empirically determining other factors that affect the growth of FDI. Results of the research indicate that investment climate as a complex indicator is not a good predictor of the change in FDI inflows. Factors that have a sustainable effect on FDI growth include level of corruption, sophistication of local market, market size, quality of infrastructure and openness to trade.