Document Type : Research Paper


1 Associate Professor of Economic, University of Shahid Beheshti

2 Researcher and a lecturer, Faculty of Economics. Allameh Tabatabaie University


In this paper, we analyze the determinants of the FDI using a panel data consisting of 46 developed and developing countries, including Iran. The period of study is 1990-2002. The estimated reduced form model is derived from a simultaneous macroeconomic model. The Housman test statistic carried out to verify using fixed effect rather than random. Also, the tests of Hadri (2000) for the null of stationarity against the alternative of unit root in panel data are carried out to show the reliability of the results, among other factors. The results imply that focusing on the necessary laws and regulations, motivating local private investment, increasing R&D, enhancing infrastructure investment’s efficiency and productivity, more skilled and productive labor force, and finally increasing the political stability of the country could be most important factors to attract FDI.