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I'm doing my dissertation on the effect macroeconomic and institutional variables have had on the FDI inflow into South Africa & Brazil, but am having difficulty formailising explicitly my model.

I would like to investigate the effect that changes in macroeconomic variables (such as market size, GDP growth rate, degree of openness of the economy etc) and institutional (economic freedom, corruption, ease of doing business indices etc) but have been left scratching my head as to how best to undertake the task, given my (solely) undergraduate work thusfar in econometrics.

I essentially want to look at how changes in these factors over time affect the flow of FDI in the two countries

I thought it best to use forward-lagged FDI i.e. FDI + 1, and then explanatory variables from time 0, to account for the slow responsivenes of FDI flows given changes in these variables. Does this make econometric sense? Are there better methods with which to capture the marginal effects of changes in these variables?

Apologies about the boldness of the request, my econometrics teacher is currently lecturing abroad and -> unavailable.

Many Thanks

Ross

You need to write your model based on a proper Economic Theory. you can not just choose variables by your own choice or interest.
There should be an economic theory behind your model. so first go search economic theories regarding FDI in countries, then model your data based on the theory.