Impact of the COVID-19 on foreign direct investment inflows in emerging economies: evidence from panel quantile regression

Abstract

The study explores the role of the COVID-19 pandemic on foreign direct investment in 12 emerging countries for the period between 2014 and 2021. The world pandemic uncertainty index is used, and panel quantile regression approach is employed to analyze the effect of the pandemic on foreign investment inflows. Unlike the conditional mean regression analysis, panel quantile regression gauges the independent variables at the different locations of the dependent variable. For this reason, it provides a more comprehensive illustration of the impact of the independent variables on dependent variables. The results show that the pandemic has an inverse effect on foreign direct investment in low- and middle-foreign investment receiving countries, while the effect is insignificant in high-foreign investment receiving countries. Apparently, the health crisis has been further harmful to the countries that have weaker economic structures.