COVID-19 PANDEMIC AND OUTWARD FOREIGN DIRECT INVESTMENT: A PRELIMINARY NOTE

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Folorunsho M. Ajide
Tolulope T. Osinubi

Abstract

Social-distance policy of most governments and the pandemic impact of corona virus (COVID-19) on human health are expected to shutter international investment and business environment. However, there is little or no study to show the early empirical evidence on this relationship, most especially its impacts on FDI ?ows in the economies. Tis note provides a preliminary evidence of the impact of COVID-19 on FDI out?ows. Our data cover cross-sectional first quarter, average data; between 1 January – 31 March, 2020 from 43 countries. Using Ordinary least square (OLS) and Quantile regressions, we document that there is a positive relationship between COVID-19 confirmed cases and FDI out?ows. In addition, there is a positive impact of COVID-19 related confirmed deaths on FDI out?ows across all quartiles estimations. This means that COVID-19 pandemic fuels the foreign direct investment out?ows. The major causes could be the reduction in the ability of firms to invest due to a shortage in the number of skilled employees because they care for their health safety, a decline in corporate profits and increase in cost of finance. In addition, the propensities to invest have been widely a?ected negatively in most economies. These factors also become obvious when most economies experience a very high level of risk perception in financial market.

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How to Cite
M. Ajide, F. ., & T. Osinubi, T. . (2020). COVID-19 PANDEMIC AND OUTWARD FOREIGN DIRECT INVESTMENT: A PRELIMINARY NOTE . Economics, 8(2), 79-88. https://doi.org/10.2478/eoik-2020-0019
Section
Original scientific paper

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