Abstract
This paper examines the role of the Google Search Volume Index (GSVI) in forecasting FDI inflows to different countries worldwide. The study utilized annual panel-series data for 155 countries over 19 years, spanning from 2004 to 2022. GSVI data is transformed into a structured panel dataset by aggregating monthly GSVI values across the “Finance”, “Business & Industrial”, and “Law & Government” categories into annual values to align with FDI inflow data. The relationship between variables was examined by using two-step GMM and Feasible Generalized Least Squares (FGLS) models, which effectively address endogeneity, serial correlation, and groupwise heteroscedasticity. The empirical analysis is conducted separately for 33 “Advanced” and 122 “Emerging and Developing” countries, accounting for heterogeneity in information environments, institutional quality, and development levels that may influence the association between web search behavior and investor attention. The results confirm the usefulness of web search frequency, measured by GSVI, in capturing investors’ attention to FDI inflows. The lagged value of GSVI across all search categories indicates a positive and statistically significant association with FDI inflows to emerging and developing countries. The same positive association is also observed between FDI inflows and GSVI in the “Finance” category for the sample of advanced countries. According to empirical findings, GSVI is capturing investors’ attention and shows great potential as a new source of non-traditional data for countries well represented in web searches.