Macroeconomic determinants of European outward foreign direct investment

The global expansion of trade and capital flows, largely driven by globalization, has significantly impacted the dynamics of foreign direct investment (FDI). This paper examines how country-specific characteristics such as real income, exchange rates, economic openness, and European monetary integration influence the outward FDI (OFDI) from European Union (EU) countries. Utilizing econometric models on data spanning from 1980 to 2020, the study confirms that these macroeconomic factors are critical in shaping FDI trends. Particularly, real income and economic openness are found to be the most influential determinants. These findings underscore the nuanced role of national economic traits in FDI outflows and suggest implications for the economic policies of EU countries. This research contributes to the literature on international investment and economic globalization (Dunning, 1993; Buckley & Casson, 1985), providing a refined understanding of the macroeconomic underpinnings of OFDI.