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Importance of Investment Climates for Inflows of Foreign Direct Investment in Developing Countries

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  • Dr. Nihal Bayraktar

Abstract

The changing direction of foreign direct investment towards developing countries has been attracting more attention in recent literature. As one possible source of the changing direction of FDI, the relationship between FDI inflows and some indicators of business friendliness (investment climate) of countries is investigated in this paper. The study covers the years from 2004 to 2013 and mainly focuses on developing countries. The results show that countries with better records of doing business tend to receive more FDI inflows. Improvements in the selected ease of doing business indicators, such as starting a business, protecting investors, and easiness of international trade, have a significant explanatory power in determining higher FDI flows to developing countries.

Suggested Citation

  • Dr. Nihal Bayraktar, 2015. "Importance of Investment Climates for Inflows of Foreign Direct Investment in Developing Countries," Business and Economic Research, Macrothink Institute, vol. 5(1), pages 24-50, June.
    • Handle: RePEc:mth:ber888:v:5:y:2015:i:1:p:24-50
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    References listed on IDEAS

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    2. Vogiatzoglou Klimis, 2016. "Free Market Institutions and FDI Performance in Emerging Asian Economies," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 52(1), pages 43-58, December.
    3. Akujuru, Chukunonye A. (PhD) & Enyioko, Newman C. (PhD), 2022. "Ease of Doing Business Policy and Efficiency of Public Enterprise in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(11), pages 501-522, November.
    4. Tafadzwa Matiza & Sandra Perks, 2022. "The tourism – Foreign direct investment nexus: Empirical evidence from Zimbabwe (2009–2015)," Tourism Economics, , vol. 28(4), pages 1059-1079, June.
    5. Nahla Samargandi & Mohammed A. Alghfais & Hadeel M. AlHuthail, 2022. "Factors in Saudi FDI Inflow," SAGE Open, , vol. 12(1), pages 21582440211, January.
    6. Xie, Qing & Yin, Hua, 2024. "Business environment and the choice of entry mode of OFDI: Evidence from China," Journal of Asian Economics, Elsevier, vol. 92(C).

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    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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