Portuguese Foreign Direct Investments Inflows: An Empirical Investigation

Abstract

This paper examines the link between Portugal’s foreign direct investment (FDI) inflows from European Union (EU-15) countries using panel data and country specific variables for the period 1996-2006. This study applies a static and dynamic panel data approach (Fixed effects and GMM system estimators) to estimate the regression equations. Portugal’s FDI inflows from EU are found to have significant associations with size market, macroeconomic stability, and geographical distance. The inflation seems to have a positive effect on attracting FDI inflows. This result was not expected.FDI; Fixed Effects; GMM-SYS; Portugal.