Premium
Determinants of FDI in France: Role of transport infrastructure, education, financial development and energy consumption
Author(s) -
Shahbaz Muhammad,
Mateev Miroslav,
Abosedra Salah,
Nasir Muhammad Ali,
Jiao Zhilun
Publication year - 2021
Publication title -
international journal of finance and economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 39
eISSN - 1099-1158
pISSN - 1076-9307
DOI - 10.1002/ijfe.1853
Subject(s) - cointegration , foreign direct investment , unit root , economics , unit root test , investment (military) , consumption (sociology) , order (exchange) , energy consumption , macroeconomics , monetary economics , econometrics , finance , engineering , social science , electrical engineering , sociology , politics , political science , law
This article explores the effect of education and transportation infrastructure on foreign direct investment for the French economy over the period of 1965–2017. Economic growth, financial development and electricity consumption are also considered as additional determinants of foreign direct investment. In so doing, the SOR unit root test is applied in order to examine unit root properties of variables in the presence of sharp and smooth structural breaks in the series. To examine the presence of cointegration between the variables, the bootstrapping ARDL cointegration test is applied. The empirical results show the presence of cointegration between the variables. Education and transportation add to foreign direct investment. Financial development declines foreign direct investment. The relationship between electricity consumption (economic growth) and foreign direct investment is bidirectional. The nonlinear relationship between education (transportation infrastructure) and foreign direct investment is U‐shaped.