Economic Freedom, Exchange Rates Stability and FDI in South Asia
This study empirically examines the role of economic freedom, market size and exchange rates in attracting foreign direct investment in south Asian countries for the period 1995-2008 by employing panel data analysis in fixed effect setting. Results clearly indicate the presence of significant positive relationship between economic freedom and FDI inflows in South Asian countries during the period of study. The real effective exchange rate was having negative association with it indicating that depreciation in host country currency negatively influences the inflow of FDI to that country. Therefore, monetary policy should focus on providing stability to currencies of host countries. The model explains approximately 90 percent of total variation in FDI. The paper concludes that South Asian countries should make concerted efforts in devising polices that improve level of economic freedom. In other words, they should provide more investment friendly climate, trade openness, efficient monetary and fiscal policies and freedom from corruption. This can help to attract more foreign direct investment in the South Asian countries.
Volume (Year): 50 (2011)
Issue (Month): 4 ()
|Contact details of provider:|| Postal: P.O.Box 1091, Islamabad-44000|
Web page: http://www.pide.org.pk
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:pid:journl:v:50:y:2011:i:4:p:423-433. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Khurram Iqbal)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.