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Institutional distance and Thai outward foreign direct investment

Author

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  • Siwapong Dheera-aumpon
  • Piyaphan Changwatchai

Abstract

Outward foreign direct investment (OFDI) is critical for source countries' competitiveness and economic growth. An analysis of foreign direct investment (FDI) determinants is required to promote OFDI. Thus, the objective of this research is to analyse the determinants of Thai OFDI with a focus on institutional distance. This study focuses on the factors that promote FDI, which can broaden the scope of international finance. This study covers 28 host economies using secondary data from 2006 to 2020. The findings show that the factors that have positive effects on the stock of Thai OFDI are Thailand's gross domestic product (GDP) and trade openness between Thailand and host countries, while the physical distance between Thailand and host nations has a negative effect. The higher institutional distances in terms of voice and accountability (VCI); and corruption control (CCI) lead to higher Thai OFDI. Conversely, institutional distances in terms of political stability; and rule of law (RLI) have negative effects. Thailand's government should provide information about host countries' institutional environments, improve domestic institutional environments, and promote trade openness.

Suggested Citation

  • Siwapong Dheera-aumpon & Piyaphan Changwatchai, 2024. "Institutional distance and Thai outward foreign direct investment," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 17(4), pages 341-349.
    • Handle: RePEc:ids:ijmefi:v:17:y:2024:i:4:p:341-349
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