An Analysis Of The Factors Affecting The Performance Of Foreign Direct Investment

With the deepening of world integration, international direct investment is showing a trend of high growth rate. But most previous theoretical researches just focused on the size of outward foreign direct investment or the location choices of multinational corporations, which only concern about growth of the "quantity" rather than the improvement of "quality". Unlike traditional macro and micro direct investment performance evaluation, this paper introduces a new index to comprehensively evaluate the match degree of a country’s outward foreign direct investment scale with the size of the market, as well as the competitiveness of enterprises in international market. Since outward foreign direct investment is an important element of the performance index, by sorting the relevant literature, we identifies the main factors of outward FDI, and analyses possible reaction mechanism of the performance index on these factors, to predict the possible positive or negative effects of each factor. On this basis, we also consider variety of influencing factors such as energy gap, institution, and economic structure. In this paper, we first established an empirical model using some basic factors, and then gradually join other influencing factors, at each step we empirically test of the impact of various factors on the performance index. The empirical results show that a country’s outward FDI performance is influenced by fixed capital formation, foreign direct investment, the wage level, the energy gap, the weighted average tariff rate of industrial products, and the economic freedom index of a country. Adjusting these factors could make a great contribution to improving the investment performance.