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Does quality of innovation, culture and governance drive FDI?: Evidence from emerging markets

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  • Kayalvizhi, P.N.
  • Thenmozhi, M.

Abstract

This study examines how technology, culture and corporate governance drive inward FDI in emerging economies. A study of 22 emerging economies shows that technology is the major attractive factor influencing inward FDI. Further, FDI increases as technology absorption and innovation capacity increase. The greater the quality of country governance, the greater the influence of corporate governance on FDI. Cultural dimensions such as individualism, masculinity and uncertainty avoidance exhibit a weaker influence on inward FDI, while power distance and indulgence have a stronger influence on inward FDI. Our results support the leapfrogging approach of emerging economies towards promoting innovation and enhancing technology adoption to drive FDI. Interaction effect of country governance further highlighted that the better the governance of a country the impact of technology, innovation, corporate governance and culture in attracting inward FDI also increases.

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  • Kayalvizhi, P.N. & Thenmozhi, M., 2018. "Does quality of innovation, culture and governance drive FDI?: Evidence from emerging markets," Emerging Markets Review, Elsevier, vol. 34(C), pages 175-191.
    • Handle: RePEc:eee:ememar:v:34:y:2018:i:c:p:175-191
    DOI: 10.1016/j.ememar.2017.11.007
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    More about this item

    Keywords

    FDI; Governance; Technology; Innovation; Culture;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • Z19 - Other Special Topics - - Cultural Economics - - - Other
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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