On the Determinants of Foreign Capital Flows - DAAD partnership ...

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GDP OPEN INV PRO RER Nominal Gross Domestic Product per Capita in US $ Million (Nominal Exports+ Nominal Imports) /Nominal GDP Taken as an index Domestic Investment = Private Investment + Public Investment Labor Productivity Index Real Exchange Rate 1 US $ = Rs …. 5. ANALYSIS AND FINDINGS 5.1 DATA ANALYSIS Pfefferman and Madarassy (1992)positive Chowdhury and Mavrotas (2005)unilateral from GDP to FDI or bilateral depending on countries Asiedu (2004)- positive Aizenman and Noy (2004) –long run Bidirectional Causality De Mello(1996)- Positive Apergis et al (2006) – Long run bidirectional relationship Mody and Srinivasan, (1998)positive Buckley et al (2003)- unidirectional with productivity causing FDI New Economist: Appreciation- Positive, vice versa. Liargovas and Kosteletou (2000) –freely floating unidirectional-ER to FDI; Managed & fixed-bilateral In-depth analysis of FDI data in the Mauritian Context 14 Central Statistical Office Penn World Table6.3 Bank Of Mauritius Central Statistical Office Bank Of Mauritius - Positive - Bidirectional Causality - Positive - Long Run Bidirectional Causality - Positive - Long run Bidirectional Causality -Positive Unidirectional Productivity causes FDI - Negative - Bidirectional Causality
0 100 200 300 400 FDI US 1970 1980 1990 2000 2010 Year With the EPZ in Figure fulfilling 5.1 its FDI role Inflows from its from setting 1976-2009 up in 1970, in US the $ Million level of FDI inflows from 1976 till 1990 has been quite stable with an trend upwards in the mid 80’s till 1990 where FDI reached about $41.02 million. However, from 1991 Mauritius entered in the league for outward investors where firms wanted to operate in lower wage sites, thus the country had to struggle to keep its foreign inflows from declining. Such an attempt had been successful with FDI stabilising from 1991 till 1996 where it started to adopt an upward trend. In 1998, FDI unfortunately dropped down to some $ 12.02 million with a rise in exchange rate and a fall in both GDP and domestic investment. 2000 was a marking year where the BOI was set up and France Telecom's purchased 40% share of Mauritius Telecom as part of their strategic alliance. The great downturn in 2001 was a return to normal FDI flows in the country after the exceptional surge occurring in 2000. (UN Conference on Trade and Development 2002). As from 2004, an upward trend started with considerable FDI inflows coming from USA with the purchase of equity by the US firm Covance Laboratories Ltd. From then onwards, investment flows picked up year by year with the flourishing tourism 15 *1 *2 *4 *3 *5 *6
Page 1 and 2: On the Determinants of Foreign Capi
Page 3 and 4: the theoretical framework and empir
Page 5 and 6: 3.1 MOTIVES BEHIND FDI Literature o
Page 7 and 8: Closely related, FDI can be taken a
Page 9 and 10: with the idea that inward FDI is a
Page 11 and 12: literature itself is ambiguous on t
Page 13: Investment. For the purpose of esti
Page 17 and 18: Figure 5.3 Geographical distributio
Page 19 and 20: Dependent variable: LDFDI Table 5.4
Page 21 and 22: Inference from Multiple Regression
Page 23 and 24: LOPEN Yes 25.02 (0.0000) LINV No 2.
Page 25 and 26: ESTIMATION OF THE LONG RUN RELATION
Page 27 and 28: From the findings and analysis, it
Page 29 and 30: Dunning J D. 1981. Explaining the I
Page 31 and 32: Kravis I B, Lipsey R. 1982. Locatio
Page 33 and 34: SACTRA (Standing Advisory Committee

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