Variables

Indicators

Measurement

Reference

Independent variables

Real Exchange rate

RER

Relative average annual real exchange rate, (country of origin’s currency/Egyptian pound)—CPI of each sample country

Liu et al. (1997) ; Thomas & Grosse (2001) , Kimino et al. (2007)

Real Exchange

rate volatility

RERV

Monthly real exchange rate volatility using GARCH (1, 1)

$ER{V}_t=\frac{1}{12}\times \left(h_1+h_2+\cdots +h_{12}\right)$

Ullah et al. (2012) ,

Azhar et al. (2015) ,

Balaban et al. (2019)

Home market size

GDP_j

Real GDP of source country

Grosse & Trevino (1996) , Kimino et al. (2007) , Barrell et al. (2017)

Host country

market size

GDP_i

Real GDP of the host country

Majeed & Ahmad (2009) , Ellahi (2011) , Barrell et al. (2017)

Existing

bilateral trade

BTRADE

Exports from the home country into Egypt and imports into the home country from Egypt, annually

Grosse & Trevino (1996) , Thomas & Grosse (2001)

Relative cost of

Borrowing

CB

Source country real lending interest rate—real lending of Egypt interest at year-end, annually.

Zhao (2003) ,

Kimino et al. (2007) , Alon et al. (2012) ,

Real lending interest rate = Lending rate minus inflation

Liu et al. (1997) , Kimino et al. (2007)

Relative Labor Productivity

LPROD

Calculated as real GDP in US$ divided

by total employed person of respective year

Hoang & Bui (2015) , Hafeez (2016) , Beloucif et al. (2020)

Corruption

CORR

Measured by the Corruption Perception Index (CPI), the absolute difference in corruption

between the host and the home country

Habib & Zurawicki (2002) , Egger & Winner (2006)

Geographic distance

DIST

The distance from the home country capital to the capital of Egypt.

Thomas & Grosse (2001) , Roberts & Almahmood (2009) , Hanh (2020)

Cultural distance

CD

Hofstede (1980)

Euclidean distance formula

$ED=\sqrt{{\displaystyle \sum }_{k=1}^4\frac{{\left(I_{ki}-I_{kj}\right)}^2}{V_k}}$

Fuentelsaz et al. (2020)

Korzeb (2021)

Dependent variable

Foreign direct investment

FDI

Annual FDI inflow from source country to host country in millions of dollars

Pan (2003) , Zhao (2003) , Kimino et al. (2007) , Liu (2010) , Parajuli & Kennedy (2010) , Jena & Mishra (2018)