The FDI Determinants among OECD Countries: A multinomial logit estimation

This paper investigates the foreign direct investment (FDI) determinants among OECD countries between 2006 and 2011. The stock market valuation of the host economy is included as a new determinant of FDI and to test the impact of the recent financial crisis on the multinationals’ location choices. The study uses a multinomial logit model to analyse positive, zero and negative FDI flows determinants. The results suggest that the likelihood of multinationals investing, compared to non-investing or disinvesting, is higher towards countries performing worse in terms of stock market prices. However, in 2009 this trend was substantially reduced. This study, finally, states that it is essential to include zero and negative FDI flows in the estimation for a reliable analysis of the FDI determinants. This enables the authorities to configure the best policies to attract new investments and sustain existing ones