The effect of Labor Productivity, Investment Security, Exchange Rate, and Economic Openness on Foreign Direct Investment in Iran under Stable and Nonstable Conditions

Abstract

The main Purpose of this study is to examination the effect of the main economic variables on the foreign direct investment in Iran under stable and nonstable conditions during 1973-2006. The study of stable conditions is based on Auto Regressive Distribution Lag (ARDL) models, and the study of nonstable conditions is based on Hitrosidacity group (GARCH) models. The study examines the effect of Positive and negative shocks on the net foreign direct investment under nonstable conditions. The results indicate the positive effects of labor productivity, economic openness and investment security, and the negative effect of the exchange rate on the net foreign direct investment under stable and nonstable conditions.

Keywords

• foreign direct investment
• exchange rate
• labor productivity
• investment security
• economic openness
• auto regressive distribution lag model
• general auto regressive conditional hitrosidacity