Financial development determinants of FDI on emerging markets

Abstract

© 2019, Research Trend. All rights reserved. The financial development of countries plays an important role in their economic development. Emerging economies, or Emerging Markets, have significantly increased their contributions to the global economy over the past decades. This was largely due to the extensive inflows of investment resources into the economies of this group of countries. What is the role of investment conditions and the financial development of economies in attracting investments from other countries? In this paper, we attempted to comprehensively assess the state of financial development of emerging economies and to determine the determinants of investment activity of foreign investors in relation to emerging markets. This paper is divided into four questions-first of all, we estimated the parameters for investing in emerging markets (a); secondly, we comprehensively described various aspects of the financial development of emerging economies-the depth, efficiency, stability and availability of the financial sector (b); then we conducted a regression analysis of the relationship between the factors of financial development and inflows of foreign direct investment based on data for the years 2000-2016 (c); finally, we looked at trends in investment activity in emerging markets, both from outside investors and from domestic ones (d). A significant part of the work is devoted to describing the characteristics of emerging markets and different approaches to the definition of this group of countries.