The Determinants of Regional Foreign Direct Investment and Its Spatial Dependence : Evidence from Tunisia
This paper explores the relationship between key economic and institutional attributes of Tunisian governorates and their ability to attract foreign direct investment inflows. A dynamic generalized method of moments and spatial autoregressive appro...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/712341606753036916/The-Determinants-of-Regional-Foreign-Direct-Investment-and-Its-Spatial-Dependence-Evidence-from-Tunisia http://hdl.handle.net/10986/34839 |
| Summary: | This paper explores the relationship
between key economic and institutional attributes of
Tunisian governorates and their ability to attract foreign
direct investment inflows. A dynamic generalized method of
moments and spatial autoregressive approaches are used to
estimate a model of regional foreign direct investment over
the recent period. The results provide evidence of regional
interdependence of foreign direct investment that appears to
be highly clustered along the coastal areas. An
increase/decrease of foreign direct investment inflows to a
given region creates an incentive/disincentive for other
foreign direct investment inflows to the same regions as
well as nearby ones. These agglomeration forces are
relatively strong in Tunisia in the presence of vertical
foreign direct investment. Further, the results indicate
that a relatively developed market size, an increase of
regional development areas, as well as robust governance
practices and infrastructure are positive determinants of
regional foreign direct investment inflows. Finally, the
paper shows that although some of the determinants exhibit
spillover effects on nearby regions, the direct effect on
the region represents the bulk of the influence over foreign
direct investment inflows. |
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