Determinants of FDI Inflows to Developing Countries of Asia

The present study is an attempt to identify the core economic factors affecting the FDI inflows to the developing countries of Asia by making use of the Exploratory Factor Analytic Technique. Principal Component Analysis (PCA) was followed after ensuring the adequacy of data with the help of correlation coefficient matrix, Kaiser-Meyer-Oklin index and Bartlett's Test of Sphericity. PCA is done with Varimax Orthogonal Rotation. The results found indicate that the core economic factors influencing the FDI inflows to the developing countries of Asia are-the economic strength of the state, infrastructure level, size of the market, technological advancement and the availability of skilled manpower. The hosts ensuring all these factors working positively can provide a good deal of attraction to the foreign investors.