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Revisiting the relationship between governance and foreign direct investment

  • Pierre-Guillaume Méon
  • Khalid Sekkat

Using a sample of 96 countries over the nineties, this paper examines the extent to which different dimensions of governance affect FDI inflows. It considers six aspects of governance. The results of a least-squares estimation suggest a positive relationship between institutional quality and FDI. However, when the issue of the endogeneity of governance is tackled thanks to 2SLS regressions, the relationship appears much weaker.

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Article provided by ULB -- Universite Libre de Bruxelles in its journal Brussels economic review.

Volume (Year): 50 (2007)
Issue (Month): 1 ()
Pages: 41-61

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Handle: RePEc:bxr:bxrceb:y:2007:v:50:i:1:p:41-61
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