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

Folorunsho  M. Ajide; Tolulope  T. Osinubi

doi:10.2478/eoik-2020-0019

Authors

Folorunsho M. Ajide University of Ilorin, Ilorin, Nigeria
Tolulope T. Osinubi Obafemi Awolowo University, Ile-Ife, Nigeria

DOI:

https://doi.org/10.2478/eoik-2020-0019

Keywords:

COVID-19, Cross-sectional Analysis, FDI, Quantile Regressions

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 ﬂows in the economies. Tis note provides a preliminary evidence of the impact of COVID-19 on FDI outﬂows. 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 outﬂows. In addition, there is a positive impact of COVID-19 related confirmed deaths on FDI outﬂows across all quartiles estimations. This means that COVID-19 pandemic fuels the foreign direct investment outﬂows. 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 aﬀected 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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