ABSTRACT
In the analysis to be made, a theoretical framework in which the base and motivation factors are distinguished to reveal by which factors determine the foreign direct investments. The basic hypothesis is that if the base factor(s) are provided, foreign direct investment flows to the countries that provide at least one motivation factor. The factors affecting the entry of foreign direct investments in emerging market economies have been analyzed by System Generalized Method of Moments over the period of 1996-2018. It has been found that increase in the quality of governance and human capital, which are the base factors, increase foreign direct investment, while increase in physical infrastructure and financial development decrease it. Physical infrastructure turned out to be a motivation factor, not a base factor, hence foreign investors or multinational companies target countries that have insufficient physical infrastructure and they make foreign direct investment in the sector of physical infrastructure. Financial development also turned out to be a motivation factor, not a base factor, hence foreign investors or multinational companies target countries that have undeveloped financial sector and they make foreign direct investment in the financial sector. It is found that increase in international trade and tariff rates increases foreign direct investment inflows.