Comparison of the effects of political decisions in the United Nations General Assembly and economic decisions on the attraction of foreign direct investment in developing countries

Document Type : Research Paper

Authors

1 PhD Student of International Economics, Semnan University, Semnan, Iran

2 Associate Professor in Economics Dept. of Economics, Faculty of Economics Management and Administrative Sciences, Semnan University, Semnan, Iran.

3 Professor, Department of Economics, University of Isfahan, Isfahan, Iran

10.22034/ecoj.2024.61604.3307

Abstract

Due to the importance of foreign direct investment and its role in providing capital and technology for developing countries, and considering that this variable is a function of economic and political variables; It is necessary to compare the effects of these two categories of variables. This issue becomes important due to the imposition of sanctions against countries in the past years. This issue has been investigated in the current research using the variable of similarity of votes in international issues and the similarity of economic decisions (demand). To do this and in order to calculate the similarity actions in foreign affairs, the sililarity of votes in the United Nations General Assembly and the Linder index have been used to evaluate the similarity in economic decision making. In order to make this comparison, the Gravity model and the Panel ARDL method have been used to explain the accumulation of foreign direct investment of Group 7 countries in some selected developing countries between 2006 and 2019. The estimation of the model shows that these two variables have a significant effect on the attraction of foreign direct investment in the long term. Also, the estimated coefficient for the vote similarity variable is larger than the estimated coefficient for the Linder index, so it can be seen that the similarity in foreign affairs plays important role in attracting foreign direct investment. Therefore, the creation and promotion of economic ties with neighboring countries can have positive effects on the attraction of foreign direct investment.

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Quarterly Journal of Applied Theories of Economics

Articles in Press, Accepted Manuscript
Available Online from 01 August 2024

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