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A vital role is played by FDI (Foreign Direct Investment) in enhancing the growth and economic status of the country. Most of the countries in the developing phase depend on FDI to foster their economy as they were facing the scarcity of hard cash for their development process. High growth performance experienced by Taiwan economy largely relies on the FDI; to attract the foreign capital inflows the Taiwan government work on many policies. But the most important factors which influence and attract the foreign capital inflows are in academic debate. On the basis of macroeconomic theory knowledge, this research paper will shed light on the econometric analysis on the data of Taiwan’s total foreign direct investment and factors influencing it, which contains exchange rate, inflation rate, Taiwan stock exchange index, import, and business income tax during the years of 1998 to 2013.

Study on Causal Association between FDI and Its Determinants in Taiwan