1. A Clear Advantage:
The Benefits of Transparency to Foreign Direct Investment
By Elaine Shen and Mike Sliwinski

2. The Story of Vietnam

3. How does a country’s transparency influence the amount of FDI a country receives?
Hypothesis: increased transparency has a positive correlation to FDI
Variables: HRV Index and FDI data
Methodology: regression analysis
Results: increasing transparency increases FDI
Theory: why transparency matters

4. Hypothesis
Research Question: Does a country’s level of transparency affect the amount of FDI it receives?
Yes!
Strong positive relationship

5. Factors Explanatory Variable (x) Dependent Variable (y) Transparency
The HRV Index
Dependent Variable (y)
Foreign Direct Investment (BOP, constant USD)
Explain why we chose FDI over other factors. Here we will reference existing literature.
How it differs from existing research: we will focus on measuring transparency using data dissemination HRV indicator.
Previous literature focuses on (freedom of speech aspect? Freedom of information in general?)
Thus our work is different and more accurate because it focuses on an economic measure of transparency

6. Methodology: Regressions
Controls
GDP (natural log)
GDP/capita (natural log)
GDP Growth rate (annual % change)
Exports (% GDP)
Trade Variable (imports+exports/GDP)
Real Interest Rate
Exchange Rate
Inflation (CPI)
Democracy
Natural resource dependency
Lagged FDI
Country fixed effects
Year fixed effects

7. Greater transparency leads to greater FDI
Results:
Greater transparency leads to greater FDI

8. Figure 1: Transparency and FDI (linear best fit)

9. Table 1: Results
Table 2. The Effect of Transparency on Foreign Direct Investment (net inflows, millions of constant USD)
Variable Name
(Model 1)
(Model 2)
(Model 3)
(Model 4)
Transparency
0.246***
0.099***
0.164***
0.191***
(0.025)
(0.027)
(0.032)
Lagged FDI
0.000
(0.000)
GDP (natural log)
1.090***
1.001**
1.401***
(0.146)
(0.392)
(0.129)
GDP Growth (annual % growth)
0.036***
0.024***
0.023***
(0.005)
(0.006)
(0.004)
Trade Variable (imports+exports/GDP)
0.109
0.038
(0.070)
(0.077)
Democracy (Polity2)
0.015**
-0.009
(0.007)
(0.009)
GDP/capita (natural log)
0.162
(0.377)
Exports (annual % growth)
(0.001)
Real Interest Rate
0.002
(0.002)
Exchange Rate
-0.000**
Inflation, consumer prices (annual %)
-0.000
Natural Resource Dependency (resource rents as % GDP)
0.013**
0.013***
(0.003)
Year Fixed Effects
Yes
Country Fixed Effects
_cons
4.212***
***
***
***
(0.132)
(3.492)
(7.206)
(3.049)
Number of observations
3360
2648
1895
3076
Adj. R-squared
0.39
0.43
0.41
0.40
Notes: Standard errors in parentheses.
*** indicates significance at the one percent level, ** at the five percent level, and * at the ten percent level.

10. But Why? 3 Reasons Decreases cost Decreases risk
Investment management during crisis

11. Conclusion
Increased transparency is positively correlated to increased FDI
Further research
Instrumental variables
Differences in differences
Significance: policy suggestions