A New FDI Potential Index: Design and Application to the EU Regions

The aim of this paper is to propose a new way of computing the FDI Potential Index to address the issue of FDI attractiveness at the EU regional level. This new index employs a sound way of selecting the variables involved in its construction, for which a factor analysis is performed. Accordingly, six factors (“economic potential”, “market size”, “labour situation”, “technological progress”, “labour regulation” and “competitiveness”) are...