COVID-19 pandemic and foreign direct investment in developing countries

Authors

DOI:

https://doi.org/10.31501/xvac4g84

Abstract

This study examines the effects of the COVID-19 pandemic on net foreign direct investment (FDI) inflows, measured as a share of gross domestic product (GDP), in 81 developing countries between 2011 and 2021. To this end, it employs a dynamic panel data model estimated using the System Generalized Method of Moments (System GMM), which accounts for the persistence of FDI inflows and potential endogeneity among the explanatory variables. The results provide no statistically significant evidence of a decline in FDI inflows in 2020. In contrast, FDI inflows recovered significantly in 2021. This finding is consistent with the resumption of global economic activity, the easing of pandemic-related restrictions, and the reorganization of global supply chains identified in the literature as factors associated with the recovery of international investment flows. The study contributes to a better understanding of the effects of the COVID-19 pandemic on foreign direct investment in developing countries.

Author Biographies

  • Beatriz Helena Terloni, Universidade Federal de Viçosa (UFV)

    Graduada em Ciências Econômicas pela Universidade Federal de Viçosa (UFV)

  • Evandro Camargos Teixeira, Universidade Federal de Viçosa UFV)

    Professor Associado do Departamento de Economia da Universidade Federal de Viçosa (UFV)

    Doutor em Economia Aplicada pela ESALQ/USP, mestre em Desenvolvimento Econômico pela Universidade Federal do Paraná (UFPR) e graduado em Ciências Econômicas pela Universidade Federal de Juiz de Fora (UFJF)

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Published

2026-10-29

Issue

Vol. 26 No. 1 (2026)

Section

Artigos

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