Abstract
There is growing consensus in the field of economic development on the importance of
overseas remittances for poverty alleviation and domestic development. Since foreign
remittances may alleviate poverty by increasing the earnings of recipient households, they
have a substantial influence on consumers. This money is used for health, education, and
business, which improves human capital, raises living standards, and provides stability in
hard economic times. The study focuses on analyzing how various economic indicators
influence foreign direct investment. Economic indicators include gross savings, adjusted
net savings, total reserves, official development assistance, Official Development
Assistance (ODA) received per capita, net Official Development Assistance (ODA)
expressed as a proportion of Gross National Income (GNI)., personal remittances,
exchange rate, PPP conversion factor to Gross Domestic Product, and Price Level Ratio
(PLR) of PPP conversion factor to market exchange rate. A dataset consisting of panel
data from 178 nations was collected for the period spanning from 1991 to 2022. This
paper utilized various econometric models like POLS, OLS, 2SLS, Driscoll-Kraay (DK),
and GMM. The analysis demonstrates a substantial beneficial relationship between
foreign direct investment and total reserves and personal remittances across all models.
This analysis demonstrates a substantial positive association between foreign direct
investment and adjusted net savings, as well as the PPP conversion factor to gross
domestic product, in all models except the GMM model. This study reveals a substantial
negative correlation between foreign direct investment and the Price Level Ratio (PLR) of
the PPP conversion factor to the market exchange rate in all models except for the GMM
and Driscoll-Kraay (DK) models. Ultimately, In the GMM model, foreign direct
investment and the exchange rate exhibit a negative correlation. The research emphasizes
essential techniques for attracting foreign direct investment, such as bolstering overall
reserves, encouraging remittance inflows, and improving adjusted net savings. Stabilizing
exchange rates and rectifying pricing disparities in PPP conversion factors are essential
for fostering a conducive investment climate. These findings provide pragmatic guidance
for legislators to encourage sustainable financial progress via Foreign Direct Investment
(FDI).
