Pull Factors of FDI: A Cross-Country Analysis of Advanced and Developing Countries

  • Indrajit RoyEmail author
  • K. Narayanan
Part of the India Studies in Business and Economics book series (ISBE)


In a cross-country bilateral FDI flow setup, we examine macroeconomic determinants of FDI flow to advanced economies (AE) from AE, to AE from developing economies (DE), to DE from AE and to DE from DE. It is observed that determinants vary significantly across these broad groups. Further, we construct composite index based on these macroeconomic determinants and rank the countries within these broad groups of FDI flow to understand macroeconomic enabler in the host country which attract FDI. We also propose a new methodology to circumvent multicollinearity issue which arises as selected determinants of FDI are found to be interrelated.


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© Springer Nature Singapore Pte Ltd. 2018

Authors and Affiliations

  1. 1.Department of Statistics and Information ManagementReserve Bank of IndiaMumbaiIndia
  2. 2.Department of Humanities and Social SciencesIndian Institute of Technology BombayMumbaiIndia

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