The role of uncertainty in investment:
Evidence of its effects through panel data on APEC economies
DOI:
https://doi.org/10.46661/rev.metodoscuant.econ.empresa.11529Keywords:
Uncertainty, FDI, APEC, irreversible investment, mean group estimatorAbstract
This study analyzes the impact of the World Uncertainty Index (WUI) and other
determinants on foreign direct investment (FDI) flows in APEC economies during the
2000-2020 period. To this end, a mean group panel model was developed, which
allows for heterogeneous slope coefficients, cross-sectional dependence, and
nonstationary series. The results demonstrate a negative relationship between FDI
and uncertainty, and a positive one with the rest of the variables. The results highlight
the relevance of macroeconomic stability and trade integration for attracting FDI,
especially in high-uncertainty contexts such as those observed in APEC.This study analyzes the impact of the World Uncertainty Index (WUI) and other determinants on foreign direct investment (FDI) flows in APEC economies during the 2000-2020 period. To this end, a mean group panel model was developed, which allows for heterogeneous slope coefficients, cross-sectional dependence, and non-stationary series. The results demonstrate a negative relationship between FDI and uncertainty, and a positive one with the rest of the variables. The results highlight the relevance of macroeconomic stability and trade integration for attracting FDI, especially in high-uncertainty contexts such as those observed in APEC.
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