<abstract xml:lang="en" xmlns="http://www.w3.org/1999/xhtml"><p>The Czech Republic (and its manufacturing industry) has been a successful recipient of foreign direct investment over recent years. Therefore, it is important to understand the decisions made by foreign investors where to place their investments and how to decide on their location between alternative industries. The aim of this paper is to find and estimate an econometric model describing the determinants of foreign direct investment (FDI) in the manufacturing industry of the Czech Republic between 2000-2007 and to make a review of recent literature on the topic. The econometric model includes several economic variables (for example labor, physical capital, R&amp;D, profits per labor, Balassa index). Together with simple techniques of estimation (OLS, fixed effects) we used a generalized method of moments (GMM). In an effort to improve the result we used also a least trimmed squares estimator (LTS) from the class of robust estimators as a diagnostic tool for the heterogeneous pattern of data.</p></abstract>

The Czech Republic (and its manufacturing industry) has been a successful recipient of foreign direct investment over recent years. Therefore, it is important to understand the decisions made by foreign investors where to place their investments and how to decide on their location between alternative industries. The aim of this paper is to find and estimate an econometric model describing the determinants of foreign direct investment (FDI) in the manufacturing industry of the Czech Republic between 2000-2007 and to make a review of recent literature on the topic. The econometric model includes several economic variables (for example labor, physical capital, R&D, profits per labor, Balassa index). Together with simple techniques of estimation (OLS, fixed effects) we used a generalized method of moments (GMM). In an effort to improve the result we used also a least trimmed squares estimator (LTS) from the class of robust estimators as a diagnostic tool for the heterogeneous pattern of data.

Determinants of FDI in Czech Manufacturing Industries between 2000-2007

Faculty of Business and Management, Brno University of Technology, Brno, Czech Republic

Institute of Economic Studies, Charles University

South East European Journal of Economics and Business

{"article-title":"Determinants of FDI in Czech Manufacturing Industries between 2000-2007"}

The Czech Republic (and its manufacturing industry) has been a successful recipient of foreign direct investment over recent years. Therefore, it is important...

Determinants of FDI in Czech Manufacturing Industries between 2000-2007

Published Online: Jun 03, 2011

Page range: 21 - 32

DOI: https://doi.org/10.2478/v10033-010-0012-5

Keywords
FDI, manufacturing industry, Czech Republic, GMM

This content is open access.

Determinants of FDI in Czech Manufacturing Industries between 2000-2007

Published Online: Jun 03, 2011

Page range: 21 - 32

DOI: https://doi.org/10.2478/v10033-010-0012-5

KeywordsFDI, manufacturing industry, Czech Republic, GMM

This content is open access.

Keywords
FDI, manufacturing industry, Czech Republic, GMM