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Web of Proceedings - Francis Academic Press

Determinants of Foreign Direct Investment

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DOI: 10.25236/ieesasm.2022.001


Jiayi Wang

Corresponding Author

Jiayi Wang


Foreign direct investment has become the key factor to promote economic development, the determinants of foreign direct investment is a complex problem in the global economic development, research on how to attract foreign direct investment has positive practical significance. FDI contributes to economic growth by influencing productivity growth in host countries and, in turn, by means of technology, skills and job creation. This paper studies the determinants of FDI and finds that there are three main determinants of FDI: national income, labor cost and policy. Countries with per capita middle-income status tend to attract foreign direct investment more easily. In addition, the cost of labor is also an important factor affecting Foreign direct investment. The lower the cost of labor, the more attractive it is to foreign direct investment. This paper also focuses on the impact of the host country's policies on Foreign direct investment, including legal policies, market policies and cultural policies. On the basis of the above research, this paper makes policy recommendations for developing countries and the need to introduce Foreign direct investment.


FDI, Investment, Determinants