Open AccessUsing Pooled Model, Random Model And Fixed Model Multiple Regression To Measure Foreign Direct Investment In Taiwan
Author(s) -
Thomas Hiestand
Publication year - 2011
Publication title -
the international business and economic research journal/the international business and economics research journal
Language(s) - English
Resource type - Journals
eISSN - 2157-9393
pISSN - 1535-0754
DOI - 10.19030/iber.v4i12.3642
Subject(s) - foreign direct investment , random effects model , econometrics , fixed effects model , regression analysis , economics , market size , measure (data warehouse) , empirical modelling , statistics , panel data , mathematics , international economics , computer science , macroeconomics , meta analysis , medicine , database , programming language
Through out the paper, two questions will be answered. The first question is, which are the countries that contribute largely to Taiwan FDI? The second question the paper is going to explore is what are the factors that draw FDI into Taiwan. According to the current literature on FDI in other countries, the determinants of FDI are relative market size, relative labor cost, distance and literacy rate. Three versions of the empirical model were estimated. They are Pooled regression model, Fixed Effect (FE) model, and Random Effect (RE) model. Throughout the three models, the relative market size hypothesis was consistently proved to be a key determinant of FDI in Taiwan.