Factors Determining The Inflow Of Foreign Direct Investment To Developing Economies – A Case Study Of Poland

Abstract :

This study contains an analysis of the main determinants of the inflow of foreign direct investment to Poland between 2010-2017. This study focused on determining the cause-and-effect relationship between the scale of inflow of foreign direct investment (response variable) and selected macroeconomic parameters of the economy (explanatory variables). In the search for significant relationships between the inflow of capital in the form of FDI to particular regions and the factors determining that inflow, a regression model was used. The choice of explanatory variables in the model was dictated by the attempt to include the most frequently researched determinants of foreign direct investment. The dependent (response) variable, which represents the level of inflow of foreign direct investments to Poland between 2010-2017, was expressed by the number of active foreign-invested enterprises in a given year. Meanwhile, the independent (explanatory) variables are indicators that illustrate the most important determinants for the location of foreign direct investment in Poland. The following variables were assumed as explanatory: market size, labor costs, and the quality and availability of labor. A regression model was used in the search for significant relationships between the inflow of capital in the form of FDI to particular regions and the factors determining that inflow. The research was conducted for 16 Polish provinces (voivodeships) in the period between 2010 to 2017. The time range of the analysis was entirely conditioned by the availability of statistical data in the GUS database (Statistics Poland, Local Date Bank).

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