|Institution:||University of Oslo|
|Full text PDF:||http://urn.nb.no/URN:NBN:no-32188
Abstract In this thesis I have analysed the institutional determinants on Foreign Direct Investment (FDI) inflow in the period of 1996-2007. I have examined which institutional determinants affect the willingness to invest in different industries in the primary sector. The institutional determinants applied in this thesis are; institutional quality, property rights, political stability, and regime durability. To understand why foreign investors chose FDI, Dunning’s OLI framework has been applied. Dunning emphasizes that a company needs to have three advantages; ownership, location and internalization. These three advantages will, however, be affected by institutional variables. Thus, theories on political regimes and economic performance have also been applied in this thesis. Panel data was applied to study the phenomenon of FDI inflow. The results showed that it is reasonable to assume that industries in the primary sector will be affected by institutional determinants differently. Although economic variables seem to have strongest effect, political variables were also significantly associated with FDI inflow in the primary sector. The results were stable across several ways of treating the independent variables, but the results did vary some depending on model estimation. Currently, data on industry based FDI is poorly reported, leading to missing values. Nevertheless, it has been improved over the years and in the future it will hopefully be possible to study a wider sample of countries than what has been possible in this thesis.