Determinants of FDI in France: Role of transport infrastructure, education, financial development and energy consumption

Abstract

This article explores the effect of education and transportation infrastructure on foreign direct investment for the French economy over the period of 1965–2017. Economic growth, financial development and electricity consumption are also considered as additional determinants of foreign direct investment. In so doing, the SOR unit root test is applied in order to examine unit root properties of variables in the presence of sharp and smooth structural breaks in the series. To examine the presence of cointegration between the variables, the bootstrapping ARDL cointegration test is applied. The empirical results show the presence of cointegration between the variables. Education and transportation add to foreign direct investment. Financial development declines foreign direct investment. The relationship between electricity consumption (economic growth) and foreign direct investment is bidirectional. The nonlinear relationship between education (transportation infrastructure) and foreign direct investment is U‐shaped.

Economic Determinants of Foreign Direct Investment: Empirical Evidence from South Asian Economies

“…The available literatures indicate that there is no mutual consent upon the economic determinants of foreign direct investment (Bimal, 2017;Nkoa, 2018;Camarero, Montolio, & Tamarit, 2020;Hanh, 2020;Minhaj-ud-Din, Azam & Tariq, 2020;Shahbaz et al, 2021). Similarly, we do not find any literature that has explicitly investigated this issue for the five South Asian economies.…”

“…However, economic growth was found essential for bringing stability in the inflow of FDI. Shahbaz al. (2021) found that high-quality growth in the transportation, education, and financial sector discourages the need for investment, and, hence, the inflow of FDI is reduced.…”

Infrastructure Development as a Prerequisite for Structural Change in Africa

“…This has an impact on investments and the profitability of companies. Several empirical studies in this direction have shown that the quality of transport infrastructure improves investment (Khadaroo and Seetanah, 2010;Samir and Mefteh, 2020;Shahbaz et al, 2021) and hence economic growth (Bosede et al, 2013;Cigu et al, 2019).…”

Role of Education and Financial Market Development in Attracting Foreign Direct Investment Inflows in Pakistan

“…Hence, a positive effect of education on FDI inflows may be hypothesized. Moreover, the FMD is a vital determinant of the macroeconomic performance of any investment, including FDI inflows [23]. Increasing FMD may indicate a better economic environment, which may attract the FDI for economic incentives, large market size, and more comfortable financial transactions.…”

“…Moreover, they argued a need for quality education to comprehend the complementary relationship between education and FDI. Shahbaz et al [23] investigated the role of FMD and education on FDI in France, controlling some other important determinants using a period 1965-2017, and found that France's education and transport infrastructure have supported the FDI inflows. However, the effect of FMD was found negative on FDI.…”