JOURNAL OF APPLIED BUSINESS AND ECONOMICS
Determinants of Foreign Direct Investment in Portugal
Author(s): Nuno Carlos Leitão, Horácio C. Faustino
Citation: Nuno Carlos Leitão, Horácio C. Faustino, (2010) "Determinants of Foreign Direct Investment in Portugal," Journal of Applied Business and Economics, Vol. 11, Iss. 3, pp. 19 - 26
Article Type: Research paper
Publisher: North American Business Press
Abstract:
The Portuguese economy has been a net recipient of FDI and the Portuguese Government has had to attract more FDI. Understanding the main determinants of FDI is important to take macroeconomic policy decisions. Based on the investment demand model, this manuscript analyzes the impact of variables, such as, market size, labour cost, openness trade, and economic stability. The paper applies a static and dynamic panel data approach (Fixed Effects estimator and GMM system estimator). Our results support the hypothesis that the market size and openness trade are significant factors to explain FDI flows into Portugal. The wage and taxes are also statically significant.