The Relationship between Economic Development and Foreign Direct Investment Flows

摘要

Starting from the theories and studies in the field, this paper emphasizes the relationship between the level of economic development given by GDP per capita, as independent variable, and foreign direct investment received and generated by a country reflected by FDI inflows and respectively FDI outflows, as independent variable. The association between the parameters was analyzed using the Excel software in order to compute the correlation coefficient, create the scatter plots, highlight the best fitting line, and calculate the coefficient of determination (R2 ) for different regression equations. The results showed that there is a weak positive relationship between the level of economic development and foreign direct investment flows. Also, the level of economic development given by the GDP per capita does not fully explain worldwide differences in FDI inflows and respectively FDI outflows. Therefore, the analyses presented in this study proved that there are other factors besides the level of economic development that influence the level of foreign direct investment received and generated by an economy.