Determinants of FDI in Developing Countries: Trade, Inflation Stability, and Telecom Infrastructure

Salva Maulidiyah Azzahra; Retno Ayu Choirun Nisa'; Irma Nur Azizah

Authors

Salva Maulidiyah Azzahra Universitas Negeri Surabaya
Retno Ayu Choirun Nisa' Universitas Negeri Surabaya
Irma Nur Azizah Universitas Negeri Surabaya

Keywords:

FDI, Developing Countries, Trade, Inflation, Infrastructure

Abstract

This study examines the factors influencing foreign direct investment (FDI) in developing countries, focusing on the role of trade openness, stable inflation, and good telecommunications infrastructure. The study uses data from 50 developing countries in 2019 and applies multiple regression analysis, along with several diagnostic checks, to examine the association between FDI and key economic factors. The results show that trade openness, low inflation, and strong telecommunications infrastructure all have a positive and significant effect on FDI. Surprisingly, GDP growth and corporate tax rates have little effect. The model explains about 48.33% of the changes in FDI, and the results are well supported by diagnostic tests. This research offers new and reliable information through thorough testing of normality, heteroskedasticity, multicollinearity, and model specification, thereby providing policymakers in developing countries with useful guidance.

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