The determinants of foreign direct investment in Australia

Australia is a recipient of large foreign direct investment (FDI) flows by world standards. Despite this, there is little empirical work on the determ inants of FDI in Australia. We carry out an econometric analysis of the det erminants of aggregate FDI inflows into Australia since the mid-1980s. We f ind that interest rates, wage changes, a measure of the openness of the eco nomy and a variable representing industrial disputes are important determin ants of FDI inflow into Australia over the period. The estimated model succ essfully explains within-sample variability but this success is greater in the beginning of the sample than at the end.