Contents of the volume

2016, Volume 69 - Issue 2

ISSN: 2499-8265
RSS feed citation: at CitEc
Publication date: 06 May 2016


Ahdi N. Ajmi, Rangan Gupta, Monique Kruger, Nicola Schoeman, Leoné Walters

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Moawia Alghalith, Samantha Chris Roach

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Smile Dube

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Keshmeer Kanewar Makun

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Genoa Chamber of Commerce
Economia Internazionale / International Economics

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Corresponding author

Keshmeer Kanewar MAKUN, dongbei university of finance and economics

Direct Foreign Investment and its Determinants: A Case Study




The intent of this paper is to determine short-run and long-run relations among foreign direct investment and its potential determinants using cointegration and error correction reaction model for Fiji Islands over the period 1980-2013. The modern time series quantitative technique of bounds test for cointegration is employed. Bounds test approach is applicable even though the underlying series are integrated of different order. The calculated F-statistics of bound test
were checked against the appropriate critical values.

The long-run and short-run coefficient is calculated using autoregressive distributed-lag (ARDL) approach. We found that there are significant positive impact of gross domestic product, trade openness and negative impact of GDP per capita, exchange rate and political instability on FDI inflow in Fiji; while level of infrastructure development, inflation and financial markets have no impact on its FDI inflow.

This study is the first attempt in specifically examining various factors that influence direct foreign investment in Fiji Islands. Given Fiji’s receptiveness to direct foreign investment in light of falling aid, the findings of this paper have useful policy implications.

JEL classification



Determinant, Foreign Direct Investment, Fiji


  1. Introduction
  2. Brief background of Fijian economy
  3. Literature review
  4. Data, model and methodology
  5. Empirical results
  6. Conclusion


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Further reading

Wood, T. (2015), “Australia’s Billion Dollar Aid Cut”, Development Policy Centre, available at: , (accessed 5 March 2015).