Foreign direct investment and openness in developing economies

This paper examines the importance of openness for attracting Foreign Direct Investment (FDI) inflows, using a sample of 36 developing economies for the period 1990-2008. It provides a direct test of causality between FDI, openness and other key variables in developing regions of the world: Latin America, Asia, Africa, CIS (commonwealth of independent states), and Eastern Europe. Openness is measured by using eight different indicators. The main empirical findings of the panel regression analysis reveal that in the long run, openness contributes positively to the inflow of FDI in developing economies. index.