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Does Public Governance always Matter? How Experience of Poor Institutional Quality Influences FDI to the South

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  • Julia Darby
  • Rodolphe Desbordes
  • Ian Wooton

Abstract

This paper investigates whether the higher prevalence of South multinational enterprises (MNEs) in risky developing countries may be explained by the experience that they have acquired of poor institutional quality at home. We confirm the intuition provided by our analytical model by empirically showing that the positive impact of good public governance on foreign direct investment (FDI) in a given host country is moderated significantly, and even in some cases eliminated, when MNEs have been faced with poor institutional quality at home.

Suggested Citation

  • Julia Darby & Rodolphe Desbordes & Ian Wooton, 2010. "Does Public Governance always Matter? How Experience of Poor Institutional Quality Influences FDI to the South," CESifo Working Paper Series 3290, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_3290
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    References listed on IDEAS

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    Cited by:

    1. Aleksynska, Mariya & Havrylchyk, Olena, 2013. "FDI from the south: The role of institutional distance and natural resources," European Journal of Political Economy, Elsevier, vol. 29(C), pages 38-53.
    2. Desbordes, Rodolphe & Darby, Julia & Wooton, Ian, 2011. "Institutional Quality and FDI to the South An Analytical Approach," SIRE Discussion Papers 2011-70, Scottish Institute for Research in Economics (SIRE).
    3. Chang Pao-Li, 2014. "Complementarity in Institutional Quality in Bilateral FDI Flows," Working Papers 20-2014, Singapore Management University, School of Economics.
    4. Celine Azemar & Julia Darby & Rodolphe Desbordes & Ian Wooton, 2012. "Market Familiarity and the Location of South and North MNEs," Economics and Politics, Wiley Blackwell, vol. 24(3), pages 307-345, November.
    5. Che, Yi & Du, Julan & Lu, Yi & Tao, Zhigang, 2017. "Institutional Difference and FDI Location Choice: Evidence from China," MPRA Paper 77158, University Library of Munich, Germany.
    6. Montfort Mlachila & Misa Takebe, 2011. "FDI from BRICs to LICs; Emerging Growth Driver?," IMF Working Papers 11/178, International Monetary Fund.
    7. repec:bla:worlde:v:39:y:2016:i:12:p:2000-2024 is not listed on IDEAS
    8. Yongzheng Yang, 2011. "Global Rebalancing; Implications for Low-Income Countries," IMF Working Papers 11/239, International Monetary Fund.
    9. repec:bla:worlde:v:40:y:2017:i:5:p:906-930 is not listed on IDEAS

    More about this item

    Keywords

    South-South FDI; public governance; institutions;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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