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Investment Climate and FDI in Developing Countries: Firm-Level Evidence

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  • Kinda, Tidiane

Abstract

Summary This paper uses firm-level data across 77 developing countries to show that constraints related to investment climate hamper Foreign Direct Investment (FDI). The main results show that physical infrastructure problems, financing constraints, and institutional problems discourage FDI. These results are robust to an alternative definition of FDI, introduction of additional explanatory variables, and some breakdown analyses (different sectors of activity and comparison between Sub-Saharan Africa and other developing countries). The results also highlight that exporter foreign firms are more constrained in their activity by physical infrastructure hurdles and the lack of skilled workers compared to firms supplying the domestic market.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 38 (2010)
Issue (Month): 4 (April)
Pages: 498-513

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Handle: RePEc:eee:wdevel:v:38:y:2010:i:4:p:498-513

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Web page: http://www.elsevier.com/locate/worlddev

Related research

Keywords: Foreign Direct Investment; investment climate; firm-level data; developing countries;

References

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Citations

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Cited by:
  1. Mottaleb Khondoker & Kaliappa Kalirajan, 2012. "Determinants of Labor-intensive exports by the Developing Countries : A Cross Country Analysis," EABER Working Papers 23304, East Asian Bureau of Economic Research.
  2. Farla, Kristine, 2013. "Determinants of firms' investment behaviour: A multilevel approach," MERIT Working Papers 055, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  3. Tidiane Kinda, 2012. "Foreign ownership, sales to multinationals and firm efficiency: the case of Brazil, Morocco, Pakistan, South Africa and Vietnam," Applied Economics Letters, Taylor & Francis Journals, vol. 19(6), pages 551-555, April.
  4. Arita, Shawn & Tanaka, Kiyoyasu, 2013. "FDI and investment barriers in developing economies," IDE Discussion Papers 431, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  5. John C. Anyanwu, 2012. "Why Does Foreign Direct Investment Go Where It Goes?: New Evidence From African Countries," Annals of Economics and Finance, Society for AEF, vol. 13(2), pages 425-462, November.
  6. Morgan Bazilian & Patrick Nussbaumer & Giorgio Gualberti & Erik Haites & Michael Levi & Judy Siegel & Daniel M. Kammen & Joergen Fenhann, 2011. "Informing the Financing of Universal Energy Access: An Assessment of Current Flows," Working Papers 2011.56, Fondazione Eni Enrico Mattei.
  7. John Anyanwu, 2011. "Working Paper 136 - Determinants of Foreign Direct Investment Inflows to Africa, 1980-2007," Working Paper Series 327, African Development Bank.
  8. Kemp-Benedict, Eric, 2012. "The national bioenergy investment model: Technical documentation," MPRA Paper 37835, University Library of Munich, Germany.
  9. Elena V. CHIRILA DONCIU, 2014. "Impact Of Economic Crisis On Fdi," SEA - Practical Application of Science, Fundația Română pentru Inteligența Afacerii, Editorial Department, issue 3, pages 183-191, April.
  10. Asongu, Simplice & Nguena, Christian, 2014. "Equitable and Sustainable Development of Foreign Land Acquisitions: what have we learnt on policy syndromes and implications?," MPRA Paper 56808, University Library of Munich, Germany.
  11. Khondoker Abdul Mottaleb & Kaliappa Kalirajan, 2010. "Determinants of Foreign Direct Investment in Developing Countries: A Comparative Analysis," ASARC Working Papers 2010-13, The Australian National University, Australia South Asia Research Centre.
  12. Tidiane Kinda, 2014. "The Quest for Non-Resource-Based FDI: Do Taxes Matter?," IMF Working Papers 14/15, International Monetary Fund.

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