Determinants of FDI attractiveness: Evidence from ASEAN-7 countries

Abstract

The article examines the impact of tax burden, institutional quality, and some macroeconomic determinants on attracting inflows of FDI in ASEAN-7. We estimate the panel data sample with pooling, a seemingly unrelated regression (SUR), and fixed-effects models. The empirical results indicate that economic growth, tax burden, quality of economic institution, and inflation are key drivers that significantly attract FDI while population growth and quality of political institution are negatively associated with FDI inflow. These findings may connect to the price transferring and demand-following hypothesis. Our results provide some important implications for policy-makers in ASEAN developing countries that are enhancing FDI inflow in the future.