Inward FDI in East Asian & Pacific Developing Countries Due to WTO Led Liberalisation

Abstract

This research paper evaluates the relative significance of World Trade Organisation (WTO) accession in general and that of WTO led liberalisation in particular in increasing an East Asian and Pacific (EAP) developing country’s desirability for foreign direct investors. Other FDI influencing factors such as economic development, macroeconomic stability, trade agreements, host market size, financial development and existence of intellectual property rights standards are also taken into consideration. Through the utilisation of annual aggregate observations for twenty eight years i-e 1988-2015, for a panel of eleven EAP developing countries, it was established that trade and investment liberalization, as well as size of local market, its extent of development, low inflation, steady depreciation of host currency and stringent IPR makes these developing nation states from East Asia and Pacific region more attractive for multinational investment. In contrast, trade agreements and financial development, though very important conventional FDI location pull factors, were insignificant in all the regression models. Moreover, it was established through the fixed and random effect panel estimation techniques that these findings are robust to the use of different empirical panel valuation methods.