TAF PUBLISHING

In recent years, Foreign Direct Investments (FDI) has been a vastly discussed economic term by both researchers and policy-makers. Foreign expertise provides various economic benefits to the host countries through improving existing production processes, increasing competitiveness, and reducing disparities in welfare. Foreign direct investment flows could be influenced by several institutional, economic and political factors. This paper aims to check up on the empirical relation between FDI and these factors in a panel of 12 countries for the 2002-2015 time period. In analysis, we employed an empirical method that considers cross-sectional dependence. Therefore, we explored long-term relations between variables through an estimation approach using Westerlund (2008) Durbin Hausman cointegration method and AMG estimator after unit root tests of variables. Empirical results clarify a positive connection between FDI and governance factors for some countries in the panel.