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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

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.

Suggested Citation

  • Rammal, Hussain Gulzar & Zurbruegg, Ralf, 2006. "The impact of regulatory quality on intra-foreign direct investment flows in the ASEAN markets," International Business Review, Elsevier, vol. 15(4), pages 401-414, August.
  • Handle: RePEc:eee:iburev:v:15:y:2006:i:4:p:401-414
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    Cited by:

    1. Metaxas, Theodore & Kechagia, Polyxeni, 2016. "Literature review of 100 empirical studies of Foreign Direct Investment: 1950-2015," MPRA Paper 71414, University Library of Munich, Germany.
    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.
    3. Rao-Nicholson, Rekha & Salaber, Julie & Cao, Tuan Hiep, 2016. "Long-term performance of mergers and acquisitions in ASEAN countries," Research in International Business and Finance, Elsevier, vol. 36(C), pages 373-387.
    4. Panayides, Photis M. & Parola, Francesco & Lam, Jasmine Siu Lee, 2015. "The effect of institutional factors on public–private partnership success in ports," Transportation Research Part A: Policy and Practice, Elsevier, vol. 71(C), pages 110-127.
    5. Asamoah, Michael Effah & Adjasi, Charles K.D. & Alhassan, Abdul Latif, 2016. "Macroeconomic uncertainty, foreign direct investment and institutional quality: Evidence from Sub-Saharan Africa," Economic Systems, Elsevier, vol. 40(4), pages 612-621.
    6. 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, Monetary Policy Group, Bank of Thailand.

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