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The Impact of Institutional Environment on Inflows of Foreign Direct Investment in European Transition Economies and Latin American Countries
[Vliv institucionálního prostředí na příliv přímých zahraničních investic v evropských tranzitivních ekonomikách a v Latinské Americe]

Author

Listed:
  • Michal Mádr
  • Luděk Kouba

Abstract

The main objective of the paper is to identify and quantify the influence of institutional environment on inflows of foreign direct investment in European post-socialist countries and countries of Latin America. The reference period is the period 1996-2012 due to data availability. The World Bank Governance Matters concept is used as the basic indicator of institutional environment. Panel data regression analysis is used for the identification and quantification purposes. According to the results, the influence of institutional environment on FDI is not entirely unequivocal in the European transition economies, but it is statistically significant in the Latin American countries. Furthermore, there are statistically significant areas - quality of democracy and government effectiveness - in the post-socialist countries, and all the institutional areas except the level of democracy in Latin America, mainly regulatory quality and rule of law.

Suggested Citation

  • Michal Mádr & Luděk Kouba, 2015. "The Impact of Institutional Environment on Inflows of Foreign Direct Investment in European Transition Economies and Latin American Countries [Vliv institucionálního prostředí na příliv přímých zah," Acta Oeconomica Pragensia, Prague University of Economics and Business, vol. 2015(1), pages 45-60.
    • Handle: RePEc:prg:jnlaop:v:2015:y:2015:i:1:id:464:p:45-60
    DOI: 10.18267/j.aop.464
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    More about this item

    Keywords

    institutional environment; foreign direct investment; transition economies; Latin America; Governance Matters;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • P26 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Property Rights

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