Abstract:
The paper carries out the econometric analysis of the foreign direct investment inflows on the countries’ level. The methodological base of the research is the gravity approach, which assumes the positive correlation between the sizes of countries’ gross domestic product and ingoing investments as well as the negative correlation between ingoing investments and the distance between the countries. The model based on the countries’ level includes the aggregated indicator, reflecting the institutional component of the host economy, namely the index of economic freedom, which significantly affects the size of the investment. The model has been estimated with the use of the Poisson Pseudo maximal Likelihood Method. On the basis of the accomplished analysis, the paper suggests recommendations for state policy regulations aiming to attract more foreign direct investment to the country.
