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<p>Social-distance policy of most governments and the pandemic impact of corona virus (COVID-19) on human health are expected to shutter international investment and business environment. However, there is little or no study to show the early empirical evidence on this relationship, most especially its impacts on FDI flows in the economies. This note provides a preliminary evidence of the impact of COVID-19 on FDI outflows. Our data cover cross-sectional first quarter, average data; between 1 January – 31 March, 2020 from 43 countries. Using Ordinary least square (OLS) and Quantile regressions, we document that there is a positive relationship between COVID-19 confirmed cases and FDI outflows. In addition, there is a positive impact of COVID-19 related confirmed deaths on FDI outflows across all quartiles estimations. This means that COVID-19 pandemic fuels the foreign direct investment outflows. The major causes could be the reduction in the ability of firms to invest due to a shortage in the number of skilled employees because they care for their health safety, a decline in corporate profits and increase in cost of finance. In addition, the propensities to invest have been widely affected negatively in most economies. These factors also become obvious when most economies experience a very high level of risk perception in financial market.</p>
</abstract>

Social-distance policy of most governments and the pandemic impact of corona virus (COVID-19) on human health are expected to shutter international investment and business environment. However, there is little or no study to show the early empirical evidence on this relationship, most especially its impacts on FDI flows in the economies. This note provides a preliminary evidence of the impact of COVID-19 on FDI outflows. Our data cover cross-sectional first quarter, average data; between 1 January – 31 March, 2020 from 43 countries. Using Ordinary least square (OLS) and Quantile regressions, we document that there is a positive relationship between COVID-19 confirmed cases and FDI outflows. In addition, there is a positive impact of COVID-19 related confirmed deaths on FDI outflows across all quartiles estimations. This means that COVID-19 pandemic fuels the foreign direct investment outflows. The major causes could be the reduction in the ability of firms to invest due to a shortage in the number of skilled employees because they care for their health safety, a decline in corporate profits and increase in cost of finance. In addition, the propensities to invest have been widely affected negatively in most economies. These factors also become obvious when most economies experience a very high level of risk perception in financial market.

Covid-19 Pandemic and Outward Foreign Direct Investment: A Preliminary Note

ECONOMICS

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

{"article-title":"Covid-19 Pandemic and Outward Foreign Direct Investment: A Preliminary Note"}

Social-distance policy of most governments and the pandemic impact of corona virus (COVID-19) on human health are expected to shutter international investment...

Covid-19 Pandemic and Outward Foreign Direct Investment: A Preliminary Note

Published Online: Dec 31, 2020

Page range: 79 - 88

Received: Oct 02, 2020

Accepted: Oct 15, 2020

DOI: https://doi.org/10.2478/eoik-2020-0019

Keywords
COVID-19, Cross-sectional Analysis, FDI, Quantile Regressions

© 2020 Folorunsho M. Ajide et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Covid-19 Pandemic and Outward Foreign Direct Investment: A Preliminary Note

Published Online: Dec 31, 2020

Page range: 79 - 88

Received: Oct 02, 2020

Accepted: Oct 15, 2020

DOI: https://doi.org/10.2478/eoik-2020-0019

KeywordsCOVID-19, Cross-sectional Analysis, FDI, Quantile Regressions

© 2020 Folorunsho M. Ajide et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Keywords
COVID-19, Cross-sectional Analysis, FDI, Quantile Regressions