Host country attractiveness to inward foreign direct investment: A case of small countries

Building on prior literature and drawing on cross-country data, this paper investigated the attractiveness of small developing host countries to foreign direct investment. A model that portrayed the attractiveness of countries to be influenced by political, economic and social factors was used to assess the factors that contribute to the attractiveness of small countries. Six variables as proxies for the three factors were identified and validated as FDI determinants for small countries based on the literature. Although this study has been constrained by no-cost data availability, the findings suggest that a combination of political, economic and social factors are important in attracting FDI in small developing countries. In addition, the socio-economic factors are more important than the political factors