Determinants of foreign direct Iinvestment in the Maldives : a multiple regression analysis

Abstract

This main objective of this study is to investigate the determinants of foreign direct investment (FDI) based on selected variables in the Maldives. Multiple regression analysis was performed on data collected from the World Bank, the Maldives Monetary Authority, and the International Monetary Fund (IMF), covering the period from 1991 to 2022. The study employs a multiple regression model with FDI as the dependent variable, and the exchange rate, merchandise account, current account balance, and tourist arrivals as independent variables. The results reveal that tourist arrivals and current account balance significantly impact FDI, indicating that these two factors play a key role in attracting FDI to the Maldives. The findings have important implications for policymakers, investors, and stakeholders focused on attracting foreign investment, which could contribute to economic growth in the Maldives.