The Determinants of Foreign Direct Investment in Iran : Bounds Testing Approach

Foreign direct investment (FDI) is counted to be an important variable to increase capital for domestic investors and improvement of capital formation in host country so almost all countries want to attract FDI. This paper attempted to investigate the impact of openness, exchange rate and infrastructures on FDI in Iran using the bounds testing (ARDL) approach to co integration. The data span is from 1975 to 2007. The results indicated that when FDI is the dependent variable there is co integration. We found all variables have positive and significant impact on Iran's FDI in long-run and short-run, except openness that has no impact on FDI in short-run