RELATIONSHIP BETWEEN FINANCIAL CRISIS AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES USING SEMIPARAMETRIC REGRESSION APPROACH

This paper analyzes whether and to what extent the inflow of FDI is affected before and after the occurence of a financial crisis in developing countries. The paper uses a semiparametric Generalized Partial Linear Models (GPLM) regression approach to check the appropriateness and effectiveness of financial crisis in the FDI regression model. The results indicate that FDI inflows decrease in the years after a financial crisis and an upturn in FDI inflows the year before a financial crisis hit the country. © Vilnius Gediminas Technical University, 2010