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Determinants of inward FDI in Ukraine: Does political stability matter?

Andrzej Cieślik
Andrzej Cieślik
 oraz 
Oleg Gurshev
Oleg Gurshev
   | 30 wrz 2020
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Article Category: Empirical Paper
Data publikacji: 30 wrz 2020
Zakres stron: 243 - 254
Otrzymano: 20 kwi 2020
Przyjęty: 18 sie 2020
DOI: https://doi.org/10.2478/ijme-2020-0021
Słowa kluczowe
© 2020 Andrzej Cieślik et al., published by Sciendo
This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

One-period lagged estimation results with time effects

Explanatory variable(1)(2)(3)(4)
GDP-SUM0.971*** (0.163)0.971*** (0.163)0.971*** (0.163)0.971*** (0.163)
GDP-DIFF0.037 (0.041)0.037 (0.041)0.037 (0.041)0.037 (0.041)
HC-DIFF0.435** (0.181)0.435** (0.181)0.435** (0.181)0.435** (0.181)
DISTANCE−0.913*** (0.091)−0.913*** (0.091)−0.913*** (0.091)−0.913*** (0.091)
TFsource0.076** (0.024)0.076** (0.024)0.076** (0.024)0.076** (0.024)
TFUkraine−0.123 (0.302)−0.313 (0.312)−0.313 (0.312)−0.113 (0.310)
IFUkraine0.015 (0.096)0.025 (0.097)0.025 (0.097)0.009 (0.097)
STAB0.289 (0.453)
DEMOCOmitted N/A
AUTOCOmitted N/A
POLITY0.179 (0.281)
Constant3.112 (26.290)18.736 (27.531)18.736 (27.531)1.124 (28.722)
Time effectsYesYesYesYes
Observations700700700700
R20.0630.0630.0630.063

Correlations between variables

POLITY1
AUTOC1−1
DEMOC1−11
STAB10.992−0.9920.992
IFCUkraine10.0610.0000.0000.000
TFsource10.050−0.986−0.9720.972−0.972
TF10.0200.014−0.022−0.0250.025−0.025
DISTANCE1−0.1200.0000.0000.0000.0000.0000.000
GDP SUM10.0110.0460.0010.0090.000−0.0010.001−0.001
HC-DIFF1−0.1330.0500.035−0.005−0.0030.0060.006−0.0060.006
GDP-DIFF1−0.0580.9370.0410.0290.0080.007−0.009−0.0100.010−0.010
VariableGDP-DIFFHC-DIFFGDP SUMDISTANCETFsourceTFUkraineIFUkraineSTABDEMOCAUTOCPOLITY

Benchmark estimation with fixed time effects results

Explanatory variable(1)(2)(3)(4)
GDP-SUM0.884*** (0.168)0.884*** (0.168)0.884*** (0.168)0.884*** (0.168)
GDP-DIFF0.055 (0.041)0.055 (0.041)0.055 (0.041)0.055 (0.041)
HC-DIFF0.411** (0.187)0.411** (0.187)0.411** (0.187)0.411** (0.188)
DISTANCE−0.893*** (0.083)−0.893*** (0.083)−0.893*** (0.083)−0.893*** (0.083)
TFsource0.091*** (0.026)0.091*** (0.026)0.091*** (0.026)0.091*** (0.026)
TFUkraine−0.149 (0.368)−0.149 (0.368)−0.149 (0.368)Omitted N/A
IFUkraine0.021 (0.065)0.021 (0.065)0.021 (0.065)0.014 (0.072)
STABOmitted N/A
DEMOCOmitted N/A
AUTOCOmitted N/A
POLITY0.147 (0.363)
Constant221.094 (369.924)221.094 (369.624)221.094 (369.624)155.140 (483.417)
Time effectsYesYesYesYes
Observations700700700700
R20.0680.0680.0680.068

Variable description

VariableDescriptionData source
FDIBilateral direct investment equity stock data from non-resident entities, includes investment by a direct investor in its direct investment enterprise (immediate or not), retail funds, real estate investment (including investment properties and vacation homes), pass-through transactions, transactions that reach or surpass the threshold of 10 percent or more voting power, reverse investment by a direct investment enterprise in its own immediate or indirect investor [IMF, 2009]. Calculated as: Direct investment enterprises to direct investor equity – reverse investment equity + nonresident equity – resident equityState Statistics Service of Ukraine
GDP-SUMLog of GDP sum (in $US million)ln(Yit + Yjt)2PennWorldTable 9.1
GDP-DIFFLog of squared GDP difference (in $US million)ln(Yit − Yjt)2
HC-DIFFLog of human capital difference, adjusted for the number of employed populationln |Hit / Lit – Hjt / Ljt|
DISTANCELog of geographical distance between the source and host countries (between capital cities, in km)CEPII
TFTrade freedom indexHeritage
IFInvestment freedom indexFoundation
STABPolitical Stability and Absence of Violence/Terrorism index that measures perceptions of the likelihood of political instability and/or politically-motivated violence, including terrorismWorldwideGovernanceIndicators
DEMOCDemocracy index that measures the presence of democratic institutions and procedures, governance constraints, civil liberties and degree of political participationCenter for Systemic Peace
AUTOCAutocracy index that measures the governance properties such as lack of regularized political competition and concern for political and civil freedoms
POLITYPolity index is measured as a difference between democracy and autocracy indices, it scores country's political system between +10 (strongly democratic) to −10 (strongly autocratic)

Benchmark estimation results

Explanatory variable(1)(2)(3)(4)
GDP-SUM0.885*** (0.168)0.885*** (0.168)0.885*** (0.168)0.885*** (0.168)
GDP-DIFF0.055 (0.041)0.055 (0.041)0.055 (0.041)0.055 (0.041)
HC-DIFF0.411** (0.188)0.411** (0.187)0.411** (0.188)0.411** (0.188)
DISTANCE−0.895*** (0.083)−0.893*** (0.083)−0.893*** (0.083)−0.895*** (0.083)
TFsource0.091*** (0.026)0.091*** (0.026)0.091*** (0.026)0.091*** (0.026)
TFUkraine1.130 (2.235)0.511 (1.211)0.511 (1.211)0.511 (1.211)
IFUkraine−0.030 (0.074)−0.007 (0.055)−0.007 (0.055)−0.007 (0.055)
STAB1.946 (3.020)
DEMOC1.293 (1.882)
AUTOC−1.293 (1.882)
POLITY0.646 (0.941)
Constant−101.188 (184.833)−58.723 (112.411)−50.960 (101.417)−54.842 (106.907)
Time effectsNoNoNoNo
Observations700700700700
R20.0680.0680.0680.068

One-period lagged estimation results

Explanatory variable(1)(2)(3)(4)
GDP-SUM0.969*** (0.161)0.970*** (0.161)0.970*** (0.161)0.970*** (0.161)
GDP-DIFF0.037 (0.041)0.037 (0.041)0.037 (0.041)0.037 (0.041)
HC-DIFF0.435** (0.181)0.435** (0.182)0.435** (0.182)0.435** (0.182)
DISTANCE−0.913*** (0.091)−0.913*** (0.091)−0.912*** (0.091)−0.912*** (0.091)
TFsource0.075** (0.024)0.076** (0.024)0.076** (0.024)0.076** (0.024)
TFUkraine−0.143 (0.281)−0.125 (0.295)−0.125 (0.295)−0.125 (0.295)
IFUkraine0.008 (0.088)0.004 (0.088)0.004 (0.088)0.004 (0.088)
STAB0.202 (0.455)
DEMOC0.365 (0.560)
AUTOC−0.365 (0.560)
POLITY0.182 (0.280)
Constant4.998 (24.35)1.100 (27.488)3.296 (25.52)2.198 (26.472)
Time effectsNoNoNoNo
Observations700700700700
R20.0630.0630.0630.063

Sample of countries used in the estimation

SampleAlbania, Algeria, Angola, Argentina, Armenia, Australia, Austria, Bahrain, Bangladesh, Barbados, Belgium, Belize, Benin, Bolivia, Botswana, Brazil, Brunei Darussalam, Bulgaria, Burkina Faso, Burundi, Cambodia, Cameroon, Canada, Central African Republic, Chile, China, Colombia, Costa-Rica, Croatia, Cyprus, Czech Republic, Denmark, Dominican Republic, D.R. of the Congo, Ecuador, El Salvador, Estonia, Ethiopia, Finland, Fiji, France, Gabon, Gambia, Germany, Ghana, Greece, Guatemala, Haiti, Honduras, Hungary, Hong Kong, Japan, Jamaica, Jordan, India, Indonesia, Italy, Iran, Iraq, Israel, Kazakhstan, Kenya, Kyrgyzstan, Kuwait, Latvia, Lesotho, Liberia, Lithuania, Luxembourg, Macau, Madagascar, Malaysia, Mali, Malawi, Maldives, Malta, Mauritius, Mauritania, Mexico, Moldova, Mongolia, Morocco, Mozambique, Myanmar, Namibia, Nepal, Netherlands, New Zealand, Nicaragua, Niger, Nigeria, Norway, Pakistan, Panama, Paraguay, Peru, Philippines, Poland, Portugal, Qatar, Korea (Rep of), Romania, Rwanda, Saudi Arabia, Senegal, Serbia, Sierra Leone, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Syria, Sudan, Swaziland, Sweden, Switzerland, Tanzania, Taiwan, Tajikistan, Thailand, Togo, Trinidad and Tobago, Tunisia, Turkey, Venezuela, Vietnam, Yemen, Ukraine, Uruguay, Uganda, United Arab Emirates, United Kingdom, United States, Zambia, Zimbabwe

Summary statistics

VariableMeanSDMinMax
FDI245.0991204.861017725.6
GDP-SUM13.5080.74012.85016.779
GDP-DIFF25.5002.24212.49633.407
HC-DIFF−1.0951.960−8.3903.197
DISTANCE5712.0673755.745399.46017284.29
TFsource76.82510.59640.690
TFUkraine85.620.62784.486.2
IFUkraine203.1641525
STAB−1.6980.463−2.02−0.78
DEMOC5.20.40056
AUTOC0.80.40001
POLITY4.40.80046
eISSN:
2299-9701
Język:
Angielski
Częstotliwość wydawania:
4 razy w roku
Dziedziny czasopisma:
Business and Economics, Political Economics, Economic Theory, Systems and Structures, Business Management, Management Accounting, Financial Controlling, Cost Calculation, Investment
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