IDEAS home Printed from https://ideas.repec.org/a/trp/01jefa/jefa0006.html
   My bibliography  Save this article

Interaction of Economic Freedom and Foreign Direct Investment Globally: Special Cases from Neglected Regions

Author

Listed:
  • Yhlas Sovbetov

    (London School of Commerce)

  • Mohamed Moussa

    (Istanbul University)

Abstract

This paper studies the macroeconomic impact of economic freedom on foreign direct investments inflows in both global and regional panel analyses involving 156 countries through the period of 1995-2016. Unlike to prior literature, it includes often neglected nations such as Fragile and Conflict-Affected states, Sub-Saharan, Oceanian, and Post-Soviet countries. The paper finds a positive impact of economic freedom on FDI under fixed-effects model in global case where a unit change in economic freedom scales FDI inflows up to 1.15 units. More specifically, all 9 regions also refer to positive and significant impact of economic freedom on FDI. The highest impact is recorded in European countries, whereas the lowest ones are documented in Fragile-Conflict affected states, Sub-Saharan zone, and Oceanian countries.

Suggested Citation

  • Yhlas Sovbetov & Mohamed Moussa, 2019. "Interaction of Economic Freedom and Foreign Direct Investment Globally: Special Cases from Neglected Regions," Journal of Economics and Financial Analysis, Tripal Publishing House, vol. 3(2), pages 113-134.
    • Handle: RePEc:trp:01jefa:jefa0006
    DOI: http://dx.doi.org/10.1991/jefa.v1i1.a4
    as

    Download full text from publisher

    File URL: http://ojs.tripaledu.com/jefa/article/download/6/3
    Download Restriction: no
    File URL: http://ojs.tripaledu.com/jefa/article/view/6/12
    Download Restriction: no
    File URL: https://libkey.io/http://dx.doi.org/10.1991/jefa.v1i1.a4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Kusi Hornberger & Joseph Battat & Peter Kusek, 2011. "Attractive FDI : How Much Does Investment Climate Matter?," World Bank Publications - Reports 11060, The World Bank Group.
    2. Bengoa, Marta & Sanchez-Robles, Blanca, 2003. "Foreign direct investment, economic freedom and growth: new evidence from Latin America," European Journal of Political Economy, Elsevier, vol. 19(3), pages 529-545, September.
    3. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
    4. Theodore H. Moran & Edward M. Graham & Magnus Blomstrom, 2005. "Does Foreign Direct Investment Promote Development?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 3810, October.
    5. Elizabeth Asiedu, 2006. "Foreign Direct Investment in Africa: The Role of Natural Resources, Market Size, Government Policy, Institutions and Political Instability," The World Economy, Wiley Blackwell, vol. 29(1), pages 63-77, January.
    6. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    7. Rahim Quazi, 2007. "Economic Freedom and Foreign Direct Investment in East Asia," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 12(3), pages 329-344.
    8. Bell, Andrew & Jones, Kelvyn, 2015. "Explaining Fixed Effects: Random Effects Modeling of Time-Series Cross-Sectional and Panel Data," Political Science Research and Methods, Cambridge University Press, vol. 3(1), pages 133-153, January.
    9. Satkartar K. Kinney & David B. Dunson, 2007. "Fixed and Random Effects Selection in Linear and Logistic Models," Biometrics, The International Biometric Society, vol. 63(3), pages 690-698, September.
    10. Kazeem Bello AJIDE & P.B. EREGHA, 2014. "Economic Freedom And Foreign Direct Investment In Ecowas Countries: A Panel Data Analysis," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 14(2).
    11. Sufian Eltayeb Mohamed & Moise G. Sidiropoulos, 2010. "Another Look At The Determinants Of Foreign Direct Investment In Mena Countries: An Empirical Investigation," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(2), pages 75-95, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Brinda Sooreea-Bheemul & Uzma Shataz Rasool & Rajeev Sooreea, 2020. "Does Economic Freedom Matter to Foreign Direct Investment in Sub-Saharan Africa?," International Journal of Economics and Financial Issues, Econjournals, vol. 10(3), pages 195-207.
    2. Mohammad Mushfiqul Haque MUKIT & Assim Ibrahim ABDEL-RAZZAQ & Mohammad Safiqul ISLAM, 2020. "Relationship between Unemployment and Macroeconomics Aggregates: Evidence from Bangladesh," Journal of Economics and Financial Analysis, Tripal Publishing House, vol. 4(2), pages 45-61.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brinda Sooreea-Bheemul & Uzma Shataz Rasool & Rajeev Sooreea, 2020. "Does Economic Freedom Matter to Foreign Direct Investment in Sub-Saharan Africa?," International Journal of Economics and Financial Issues, Econjournals, vol. 10(3), pages 195-207.
    2. Dalila NICET-CHENAF & Eric ROUGIER, 2009. "FDI and growth: A new look at a still puzzling issue," Cahiers du GREThA (2007-2019) 2009-13, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    3. Sadia IMTIAZ & Malik Fahim BASHIR, 2017. "Economic freedom and foreign direct investment in South Asian countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(611), S), pages 277-290, Summer.
    4. Singh Devesh & Gal Zoltán, 2020. "Economic Freedom and its Impact on Foreign Direct Investment: Global Overview," Review of Economic Perspectives, Sciendo, vol. 20(1), pages 73-90, March.
    5. Ludovic Feulefack Kemmanang & Jonas Juleo Dongmo Zamké, 2022. "Does the quality of institutions matter for foreign investment concentration in Africa? Understanding the controversial role of international aid," Review of Development Economics, Wiley Blackwell, vol. 26(1), pages 354-374, February.
    6. Krammer, Marius Sorin, 2008. "International R&D spillovers in transition countries: the impact of trade and foreign direct investment," Kiel Advanced Studies Working Papers 446, Kiel Institute for the World Economy (IfW Kiel).
    7. Shahbaz, Muhammad & Nasreen, Samia & Abbas, Faisal & Anis, Omri, 2015. "Does foreign direct investment impede environmental quality in high-, middle-, and low-income countries?," Energy Economics, Elsevier, vol. 51(C), pages 275-287.
    8. repec:ipg:wpaper:2014-542 is not listed on IDEAS
    9. Rosa Forte & Nancy Santos, 2015. "A cluster analysis of FDI in Latin America," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 52(1), pages 25-56, May.
    10. M. Tahir Suleman & M. Talha Amin, 2015. "The Impact of Sectoral Foreign Direct Investment on Industrial Economic Growth of Pakistan," Journal of Management Sciences, Geist Science, Iqra University, Faculty of Business Administration, vol. 2(1), pages 102-123, March.
    11. Omri, Anis & Nguyen, Duc Khuong & Rault, Christophe, 2014. "Causal interactions between CO2 emissions, FDI, and economic growth: Evidence from dynamic simultaneous-equation models," Economic Modelling, Elsevier, vol. 42(C), pages 382-389.
    12. Burcu ŞENALP, 2018. "Foreign Direct Investment, Economic Growth and Economic Freedom: A Literature Survey," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 68(2), pages 301-336, December.
    13. Céline Azémar & Rodolphe Desbordes, 2009. "Public Governance, Health and Foreign Direct Investment in Sub-Saharan Africa," Journal of African Economies, Centre for the Study of African Economies, vol. 18(4), pages 667-709, August.
    14. Economou, Fotini, 2019. "Economic freedom and asymmetric crisis effects on FDI inflows: The case of four South European economies," Research in International Business and Finance, Elsevier, vol. 49(C), pages 114-126.
    15. Mohamad A. Abou Hamia, 2022. "What level of international technology should developing countries transfer to sustain their economic growth?," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(6), pages 4217-4239, December.
    16. Yahyaoui, Ismahen, 2021. "How corruption mitigates the effect of FDI on economic growth?," MPRA Paper 111190, University Library of Munich, Germany.
    17. Nabila Asghar & Samia Nasreen & Hafeez ur Rehman, 2012. "Relationship between FDI and Economic Growth in Selected Asian Countries: A Panel Data Analysis," Review of Economics & Finance, Better Advances Press, Canada, vol. 2, pages 84-96, February.
    18. Hakimi, Abdelaziz & Hamdi, Helmi, 2015. "How Corruption affect Growth in MENA region? Fresh Evidence from a Panel Cointegration Analysis," MPRA Paper 63750, University Library of Munich, Germany.
    19. Omri, Anis & Kahouli, Bassem, 2014. "Causal relationships between energy consumption, foreign direct investment and economic growth: Fresh evidence from dynamic simultaneous-equations models," Energy Policy, Elsevier, vol. 67(C), pages 913-922.
    20. Zaiter Lahimer, Mahjouba, 2011. "L’impact des entrées de capitaux privés sur la croissance économique dans les pays en développement," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/7670 edited by Sterdyniak, Henri.
    21. Theodoros Christoforidis & Constantinos Katrakilidis, 2022. "Does Foreign Direct Investment Matter for Environmental Degradation? Empirical Evidence from Central–Eastern European Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(4), pages 2665-2694, December.

    More about this item

    Keywords

    Economic Freedom; Openness of Economy; Foreign Direct Investments; Neglected Regions; Panel Data Analysis.;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F00 - International Economics - - General - - - General
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:trp:01jefa:jefa0006. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: David Simon Hall (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.