The determinants of foreign direct investment in Malta

Abstract

This dissertation will discuss the determinants of foreign direct investment in Malta. Foreign direct investment has played a major role in the development of the world economy, as in the last years it has overtaken trade and has provided spill-over effects which helped countries to grow economically and thus gain a more prominent trading role. Multi-national enterprises are profit maximising firms which will only invest in the countries that offer them the most revenue. Technology plays a crucial role as these enterprises will invest in innovative technology to limit their costs and compete more competitively in their respective markets. A country will seek to attract such investment in order to boost its name in the international community, and will do so by various means. Countries will first need to invest in their own resources, be it infrastructure, institutions and policies, to attract investment. The questions answered are two: to find what are the determinants of foreign direct investment in Malta and what are the barrier effects posed by such determinants. This dissertation was written with the aim of being a contribution to Malta as no similar study exists for an island which relies on such investment. This dissertation is divided as follows; introduction towards the subject, literature reviewed, methodology, data analysis and conclusion.