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The impact of regulatory quality on intra-foreign direct investment flows in the ASEAN markets

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  • Rammal, Hussain Gulzar
  • Zurbruegg, Ralf
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    Abstract

    Using a panel data set containing information on FDI flows from home to host countries, this paper examines the impact of changes in the quality of government regulatory effectiveness and governance practices upon the direction of outward FDI flows between five ASEAN economies of Indonesia, Malaysia, Philippines, Singapore, and Thailand. The results show that a deterioration in the effectiveness and enforcement of investment regulations (such as price controls and excessive regulation in foreign trade and business development) have an adverse effect upon intra-ASEAN FDI, and are significant factors in explaining the recent downward trend in ASEAN FDI flows. These results are robust to changes in a number of controlling variables for various economic conditions that the extant FDI literature consider. Also, these results have several significant implications for future policy makers in recommending means to revitalize intra-ASEAN investment.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Business Review.

    Volume (Year): 15 (2006)
    Issue (Month): 4 (August)
    Pages: 401-414

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    Handle: RePEc:eee:iburev:v:15:y:2006:i:4:p:401-414

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    Related research

    Keywords: Foreign direct investment policy Investment incentives Intra-ASEAN FDI;

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    Cited by:
    1. Pornpen Sodsrichai & Sakkapop Panyanukul & Nantaporn Pongpatthananon, 2011. ""Putting All Eggs in One Basket" Thailand's Under-Investment Abroad: Impact and Explanations," Working Papers 2011-06, Economic Research Department, Bank of Thailand.
    2. Saorín-Iborra, M. Carmen, 2008. "Time pressure in acquisition negotiations: Its determinants and effects on parties' negotiation behaviour choice," International Business Review, Elsevier, vol. 17(3), pages 285-309, June.

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