The Impact of Foreign Direct Investment Management on Economic Growth Using Multiple Linear Regression (MLR)

Abstract

Global economies are facing geopolitical and ongoing economic impacts from the COVID-19 pandemic, which brings back the topic of growth determinants. This study focuses on the United States, the world's largest economy and a significant recipient of foreign direct investment (FDI). For this reason, we analysed whether there is a positive correlation between the volume of FDI inflows and the growth of gross domestic product (GDP). A multiple linear regression (MLR) model was used to examine the effects of various exogenous control variables on the quarterly GDP growth in the USA from 1999 to 2022. During these 96 quarters, FDI was found to have a positive effect on GDP growth at statistical significance of 5% (p < 0.05). Specifically, a one-million increase in FDI ceteris paribus caused an estimated GDP growth of approximately 743.43 dollars. The results ultimately propose positive implications for less developed countries that could utilize emphasising their FDI management policies to achieve higher economic growth.