• The level of infrastructure and support for infrastructure in a country is an important
factor in attracting FDI. Tax revenue as a percentage of GDP is used as a proxy for the
level and support of infrastructure.
• The educational characteristics of the workforce play an important role in attracting FDI.
The adult literacy rate of the population is used as a proxy to represent the educational
level of the workforce.
• The urbanization of the population represents improved infrastructure and modernity.
The urban population as a percentage of the total population is used as a proxy to
represent the society’s increasing modernization and ability to attract FDI.
• The degree to which the economy has been liberalized and is open to foreign trade should
influence FDI. Imports as a percentage of GDP is used as a proxy to represent the
economy’s level of openness.
• A growing labor supply can indicate a growing and healthy economy. The annual amount
of labor available in the workforce is used to represent this measure.
• High levels of government debt can signal poor governance and act as a disincentive to
invest. The amount of public debt in US dollars is used to represent this aspect of the
economy.
These variables were combined in a variety of models for the time period 1993 through 2003.
FDI or the log of FDI in the telecommunications sector was the dependent variable in all cases.
In all of the models presented below the first two years of data were excluded and in some cases
the last year as well. This data was excluded because the data most likely reflects the initial
opening of the telecommunications sector to FDI and therefore the FDI inflows were very low
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