Information Communication Technology as a Determinant of the FDI Flows

Abstract

The flows of global FDI have increased substantially in the recent years. Many developing countries have improved living conditions, thanks to the great inflow of FDI. Everybody agrees that the effects from FDI inflows are positive and generate strong economic impulses through the economy of the country receiver. Those effects make the countries compete each other to win more foreign capital.That is why many studies are dedicated on exploring the determinants of FDI flows. The policy makers need to know what makes markets attractive for foreign companies and how each factor impact on FDI inflows. The main subject of this paper is exploring the impact of ICT on FDI inflows. In the frame of the effort it will be analyzed the data from many developing as well as developed countries. It will be made a comparative analyze of the level of the ICT in a certain country, with the level of the FDI inflows. According to the findings in this paper there is a significant correlation between the FDI inflows and the level of ICT development, which means that the foreign investors consider ICT as important factor that determines FDI location. The findings also suggest that the correlation is more intensive when foreign companies invest in high-tech sector, than in labor intensive sectors.The findings can be use by policy creators in their efforts to make more attractive clime for FDI. Only by knowing what foreign investors are looking for, the country can become a home for many MNC.

DOI: 10.5901/mjss.2013.v4n11p218