Premium
Determinants of Inflow of Foreign Direct Investment in Hungary and China: Time‐Series Approach
Author(s) -
WANG ZHEN QUAN,
SWAIN NIGEL
Publication year - 1997
Publication title -
journal of international development
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.533
H-Index - 66
eISSN - 1099-1328
pISSN - 0954-1748
DOI - 10.1002/(sici)1099-1328(199707)9:5<695::aid-jid294>3.0.co;2-n
Subject(s) - depreciation (economics) , foreign direct investment , economics , currency , monetary economics , china , international economics , tariff , capital (architecture) , foreign capital , investment (military) , politics , capital formation , macroeconomics , market economy , human capital , financial capital , history , archaeology , political science , law
Abstract This paper analyses what factors best explain foreign capital inflows into Hungary and China during the period 1978–92. The size of the host country markets is found to play a positive role, while the cost of capital variables and political instability are negatively correlated with investment inflows. It supports the hypothesis that low‐cost labour and currency depreciation are important factors in explaining how much foreign capital inflows into a particular country. There is little evidence to support classical hypotheses concerning tariff barriers and imports variables. The OECD growth rates show significant positive correlation with foreign direct investment in Hungary. © 1997 John Wiley & Sons, Ltd.