Identify Factors Affecting Foreign Direct Investment Capital In The Southern Key Economic Region

Abstract

This paper focuses on building research model and analyzing the main factors influencing foreign direct investment (FDI) attraction in the Southern Key Economic Region during the period of 2005 - 2016. Based on theories and empirical studies, the authors identified the key factors that affect FDI attraction in that area. Through the development of hypotheses, a quantitative research mode l with Stata software help ed to select an estimation method with reliable and effective test results. The selected research method was the estimation method according to 3 approaches: OLS (P OOLED Regress Model) the least estimation method, Fix Effect Model (FEM), and Random Effect Model (REM). The research model used was the Panel Data model. The author performed the test hypotheses for the factors affecting FDI attraction in the Southern Key Economic Region. After regression with 3 methods (POOLED, FEM, and REM), and using F-Test and Breusch Pagan Test, the aim was to estimate the efficiency of the model and consider the simultaneous effects of independent variables on the dependent variable. These include d the following factors: market size, infrastructure, labor force, quality of human resources, market openness, trade openness, and institutional quality. Examining the relationship between market size, infrastructure development, labor force, quality of human resources, trade openness and institutional quality of FDI attraction into the Southern Key Economic Region, the authors select ed the Pooled Regression Model. The results of this paper may partly help policymakers to have an overall vision and may contribute to the development of appropriate solutions and strategies to attract and effectively use foreign direct investment capital to promote the socio-economic development of the region. Furthermore, the findings may contribute to guidelines to attract and make better use of these funds in the future, better serving the economic development of this region.