Determinants of International Foreign Portfolio Investment Flows to GCC Countries: An Empirical Evidence

Abstract

The present study focuses on the roles of trade openness, market forces and domestic credit to private sector and infrastructures by documenting the determinants of Foreign Portfolio Investments (FPI) to Gulf Cooperation Council (GCC) economies. The determinants of foreign portfolio investment for the period between 2000 and 2018 were estimated by implementing random effects (RE), fixed effects (FE), and GMM methods. The dependent variable was foreign portfolio investment against different independent variables. The results of the study lead to the development of framework through the associated countries in GCC that are mainly focused on attracting additional foreign portfolio investment. The results have clearly showed that there is significant influence of macroeconomic factors on the decision of choosing an investment country by the foreign investor.