Question: Question 6

In a 1985 examination of the economic and political determinants of foreign direct investment Schneider and Frey argued that the amount of direct foreign investment a country attracts is related to the size of its gross national product, its balance of trade and its level of political risk.

From an analysis of the data for a random sample of countries contained in file “Question 6 Data”, would you support their argument?

If multi-collinearity caused a problem in the analysis, what steps did you take to mitigate its effect?

The structure of the file is as indicated below