Forecasting Global FDI: A Panel Data Approach

29 Pages Posted: 18 Aug 2021

See all articles by Nina Vujanović

Nina Vujanović

Central Bank of Montenegro

Bruno Casella

United Nations - Conference on Trade and Development (UNCTAD)

Richard Bolwijn

United Nations - Conference on Trade and Development (UNCTAD)

Date Written: February 13, 2021

Abstract

The future patterns of foreign direct investment (FDI) are important inputs for policymakers, even more so during severe economic downturns, such as the one caused by the COVID-19 pandemic. Yet, there is neither empirical consensus nor significant ongoing empirical research on the most appropriate tool for forecasting FDI inflows. This paper aims to fill this gap by proposing an approach to forecasting global FDI inflows based on panel econometric techniques – namely the generalized method of moments – accounting for the heterogeneous nature of FDI across countries and for FDI dependence across time. The empirical comparison with alternative time-series methods confirms the greater predictive power of the proposed approach.

Keywords: FDI, forecast, panel econometrics, time-series econometrics, underlying FDI trend, generalized method of moments

JEL Classification: C23, F23, F47

Suggested Citation

Vujanović, Nina and Casella, Bruno and Bolwijn, Richard, Forecasting Global FDI: A Panel Data Approach (February 13, 2021). Transnational Corporations Journal, Vol. 28, No. 1, 2021, Available at SSRN: https://ssrn.com/abstract=3906374

Nina Vujanović (Contact Author)

Central Bank of Montenegro

Bulevar Svetog Petra Cetinjskog, 6
Podgorica, 81000
Montenegro

Bruno Casella

United Nations - Conference on Trade and Development (UNCTAD) ( email )

Palais des Nations
Office E 8074
Geneva, 1211
Switzerland

Richard Bolwijn

United Nations - Conference on Trade and Development (UNCTAD) ( email )

Palais des Nations
Office E 8074
Geneva, 1211
Switzerland

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