Factors affecting foreign direct investment: Afghanistan

In this study, factors affecting foreign direct investment: Afghanistan has been researched. Primarily investment concept and types of foreign direct investment have been clarified. In the literature review, generally the factors directly affecting foreign direct investment in developing and undeveloped countries have been greatly examined. In this study, the total globalization index, gross domestic product, import volume, export volume and exchange rate (USD/AFN) have been taken as the variables affecting foreign direct investment in Afghanistan. Time-series analysis has been exercised with reference to data set between 1991-2013. Econometric methods, variables, and results are discussed in detail. For this purpose, firstly stationary of the data have been tested and correlation analysis has been used to examine the relationships between variables. In addition the co-integration analysis between variables has been analyzed. 3 different regression models were developed in order to uncover the factors affecting foreign direct investment. According to this regression results; total globalization, import and export can have significant and positive impact; gross domestic product and foreign exchange rate have negative impact on foreign direct investment in Afghanistan.