Do Exchange Rate Changes Drive Foreign Direct Investment:An Empirical Analysis Of Six OECD Countries

In the last years,when it comes to foreign direct investments,a big step forward was made,both in the inflow and outflow of FDI.Today,developed and developing countries see their economic future in foreign direct investments,and it's no wonder that a large number of research is devoted to this topic.In our research,we will explore the FDI inflow of six OECD countries-Australia,Canada,the United Kingdom,Switzerland,Germany and the Russian Federation.Apart from Russia,all these countries are developed countries,while Russia is classified as a developing country.Irrespective of their membership in this organization(but also other organizations),this country is characterized by a relatively stable and strong economy.Foreign direct investment today,whatever is it inflow or outflow represent are one of the most important forms of international capital flows.Developed countries play a key role in capital flows,primarily as investors,but also as beneficiaries of FDI.Having in mind the economic trends as well as the amount of FDI realized globally,around the world,the question arises what are the relevant factors that have the influence on foreign direct investment in a particular location.From a macroeconomic point of view,FDI represent a particular form of capital flow across the borders of the national economy,from the country of the investor to the host country,and is recorded in the capital part of the balance of payments.FDI inflow benefit not only countries in development but also already developed countries and their economies.FDI inflow usually play a crucial part in a country's economy and it is often a major driver to development of a country.This paper aims to show the importance and tendencies in the movement of foreign direct investment globally,both in developed and developing countries.In this paper,a general analysis of the factors such as the exchange rate and economic growth of these countries will be carried out as well as the analysis of their FDI inflows.The main objective of this thesis was to determine do exchange rates drive foreign direct investment in the countries mentioned below for a period of time from 1996 to 2016.From the test conducted we can see a relationship between the variables and can conclude that there is a relationship between the variables and the FDI.