FOREIGN DIRECT INVESTMENT, EXPORT STRUCTURE, AND VIRTUAL WATER FLOWS: A MULTI‑COUNTRY INPUT-OUTPUT ANALYSIS OF WATER RESOURCE PRESSURES FROM INTERNATIONAL TRADE

Abstract

Water stress is increasingly recognized as an economic and investment risk, yet its longitudinal relationship with foreign direct investment (FDI) remains insufficiently understood. This study examined whether water stress, calendar year, and World Bank income group predicted FDI inflows across countries from 2000 to 2022. A quantitative longitudinal panel design used 4,991 country-year observations from the World Development Indicators. FDI inflows as a percentage of GDP were modeled as the dependent variable, while water stress, centered year, and income-group code were entered as fixed effects, with country specified as a random intercept. Extreme values were winsorized at the 1st and 99th percentiles. Descriptive statistics, Pearson correlations, multicollinearity diagnostics, null and adjusted mixed-effects models, residual diagnostics, and REML–ML robustness comparisons were performed in SPSS 26. Water stress showed a small negative but nonsignificant association with FDI (B = −0.003886, p = .198), and year was also nonsignificant (B = −0.012240, p = .574). Income group had a significant positive effect (B = 1.625317, p = .006). The ICC was 0.597, indicating substantial between-country variation. The findings suggest that national structural conditions directly influence FDI more strongly than water stress alone.