What is FDI Determinant Factors

The chapter aims both to analyze and interpret the determinants of foreign direct investment by conducting an analysis on the actual member countries of the European Union over the period 2005-2019. The chapter consists of three parts: 1) the role and importance of FDI and theories related to FDI, 2) the evolution of FDI in the member countries of the EU, and 3) the determinants of FDI: a case study on the influence of determinant factors on foreign direct investment. Given that FDI is significant in terms of economic growth and represents an important feature of the economy, the author has decided to analyze the factors that could influence FDI. The selected factors are trade freedom index, economic freedom, trade balance, exports and imports, governmental debt, fiscal freedom index, financial freedom index, inflation, unemployment rate, and labor freedom index. The analysis will be performed on the member countries of the European Union and the sample period is 2005-2019.