Selected Factors Determining Inward of Foreign Direct Investment in the Czech Regions in Years 2002 to 2012

• Main Author: Ondřej Babuněk
• Format: Article
• Language: English
• Published: Czech Statistical Office 2017-09-01
• Series: Statistika: Statistics and Economy Journal
• Subjects: Foreign direct investment; unemployment; inflation; expenditure on research and development; pollution; panel data
• Online Access: https://www.czso.cz/documents/10180/45606531/32019717q3016.pdf/8dbdccdf-67e4-4227-a2a2-560fcd258f6b?version=1.0
• ISSN: 0322-788X; 1804-8765

This study aims at the research of the influence of unemployment rate (Un), exchange rate of CZK/USD (Ex), inflation rate (Inf), expenditures on research and development (RaD), size of wages and environmental pollution on inward foreign direct investment (FDI) into regions in the Czech Republic in the period 2002–2012. The study dealt with the whole period, then the pre-crisis and crisis period, altogether with the inclusion or elimination of Prague in or out of the group of Czech regions. Models without and with dynamic parameter were checked. For estimation of influence of the above mentioned parameters the fixed effects model, random effects model and pooled ordinary least squares (POLS) were used. For dynamic model the generalized method of moments and POLS were applied. The results showed that Wage, appreciation of Ex and RaD positively determined the inflow of FDI to Czech regions and no negative determinant of inward FDI has been found. On the other hand, results of dynamic model imply that inward FDI in preceding year, appreciation of Ex, RaD have positive impact on inward FDI in current year. However, negative impact of Un and Inf on inward FDI were detected. Results of this research enable the policy makers or decision makers try to focus their attention on specific factors and eliminate to consume scarce funding.