Instrument suggestions for FDI
Without much information on your regression model it's hard to make a good suggestion. But you may have a look at the Frankel and Romer AER's paper. They construct an instrument for trade, but it could be used for FDI, based on geographic characteristics. I assume that geographic distance between two countries is a good predictor of FDI flows and that ceteris paribus a Canadian firm based in Vancouver has a higher probability to set up an affiliate in Seattle than in Dallas.