A multi-criteria decision-making model for evaluating priorities for foreign direct investment

• Main Authors: Korhan K. Gokmenoglu, Shahram Alaghemand
• Format: Article
• Language: English
• Published: Croatian Operational Research Society 2015-10-01
• Series: Croatian Operational Research Review
• Subjects: FDI; AHP; TOPSIS; MP-MA decision making
• Online Access: http://hrcak.srce.hr/index.php?show=clanak&id_clanak_jezik=218182

The objective of this study is to evaluate the relative priority of nine developed countries as a home country for foreign direct investment (FDI) from the vantage point of the United States during three time periods: pre-crisis (2004-2006), crisis (2007-2009), and post-crisis (2010-2012). Our study suggests a methodology based on a combination of the analytic hierarchy process (AHP), the technique for order preference by similarity to ideal solution (TOPSIS), and the multi-period multi-attribute decision-making (MP-MADM) technique. To investigate our research question, we selected fifteen robust FDI determinants from recent studies. The results for all three time periods show that productivity, market potential, market size, GDP growth and development have the highest priority in the decision-making process. On the other hand, we found that the 2007 global financial crisis significantly affected each variable in the decision-making process. During the crisis, two variables in particular - corruption and GDP growth - significantly increased in importance. These findings have far-reaching policy implications and can assist policymakers and investors in their strategic decision-making process.