This article examines the impact of trade openness and political stability on foreign direct investment (FDI) in 25 Asia-Pacific countries from 1990 to 2020. Using the dynamic system Generalized Method of Moments (GMM) to address heteroskedasticity and autocorrelation, and the Johnson-Neyman test to analyze moderation, the study finds that trade openness positively affects FDI, while political stability has a negative effect. Trade openness significantly moderates the relationship between political stability and FDI, a finding robust even before the 2008 financial crisis and in non-tax-haven countries. These findings support market-seeking, efficiency-seeking, resource-seeking, and regulatory risk theories and offer policy implications for attracting sustainable FDI in the Asia-Pacific region.

Ai Ngoc Nhan Le, Ha Pham, Dung Thi Ngoc Pham, Khoa Dang Duong