Political Institutions and Foreign Direct Investment Flows into Developing Countries
The major focus of this paper is on the relationship between political, social and economic institutions and Foreign Direct Investment in developing economies. For a decade, the relationship between institutions and Foreign Direct Investment has been receiving growing attention. The link between the quality of institutions and FDI in developing countries, especially in transition economies, has led scholars to focus on the quality of institutions as determinants of FDI in developing countries. This paper explores how social economic and political institutions help explain cross-country variations in Foreign Direct Investment flows by applying Panel data regressions including 67 developing countries for the period 1984-2005. The findings suggest that better perceptions of the quality of institutions have overall a positive and economically significant effect on FDI. Especially, the unpredictability of laws, political and economic instabilities, government instability and high level of corruption play a major role in deterring FDI.
|Date of creation:||13 Sep 2009|
|Date of revision:||02 Feb 2010|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Felipe Larraín & José Tavares, 2004. "Does Foreign Direct Investment Decrease Corruption?," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 41(123), pages 217-230.
- Robert E. Lipsey, 2001. "Foreign Direct Investment and the Operations of Multinational Firms: Concepts, History, and Data," NBER Working Papers 8665, National Bureau of Economic Research, Inc.
- Adam Przeworski & Fernando Limongi, 1993. "Political Regimes and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 7(3), pages 51-69, Summer.
- Ahmet Faruk AYSAN & Mustapha Kamel NABLI & Marie-Ange VÉGANZONÈS-VAROUDAKIS, 2007.
"Governance Institutions And Private Investment: An Application To The Middle East And North Africa,"
The Developing Economies,
Institute of Developing Economies, vol. 45(3), pages 339-377.
- Marie-Ange Veganzones & A. Aysan & M.K. Nabli, 2006. "Governance Institutions and Private Investment: An application to the Middle East and North Africa," Post-Print hal-00199091, HAL.
- Marie-Ange Veganzones & A. Aysan & M.K. Nabli, 2006. "Governance Institutions and Private Investment. An Application to the Middle East and North Africa," Post-Print hal-00229437, HAL.
- Ahmet Faruk Aysan & M. K. Nabli & M-A Veganzones-Varoudakis, 2006. "Governance Institutions and Private Investment: An Application to the Middle East and North Africa," Working Papers 2006/08, Bogazici University, Department of Economics.
- Marie-Ange Veganzones, 2006. "Governance Institutions and Private Investment : An application to the Middle East and North Africa," Post-Print hal-00070860, HAL.
- Marie-Ange Veganzones & A. Aysan & Mustapha Kamel Nabli, 2007. "Governance institutions and Private Investment: An Application to the Middle East and North Africa," Post-Print hal-00171771, HAL.
- Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
- Oxley, Joanne E., 1999. "Institutional environment and the mechanisms of governance: the impact of intellectual property protection on the structure of inter-firm alliances," Journal of Economic Behavior & Organization, Elsevier, vol. 38(3), pages 283-309, March.
- Caves, Richard E, 1971. "International Corporations: The Industrial Economics of Foreign Investment," Economica, London School of Economics and Political Science, vol. 38(149), pages 1-27, February.
- Gastanaga, Victor M. & Nugent, Jeffrey B. & Pashamova, Bistra, 1998. "Host Country Reforms and FDI Inflows: How Much Difference do they Make?," World Development, Elsevier, vol. 26(7), pages 1299-1314, July.
- Busse, Matthias & Hefeker, Carsten, 2007. "Political risk, institutions and foreign direct investment," European Journal of Political Economy, Elsevier, vol. 23(2), pages 397-415, June.
- Hefeker, Carsten & Busse, Matthias, 2005. "Political Risk, Institutions and Foreign Direct Investment," HWWA Discussion Papers 315, Hamburg Institute of International Economics (HWWA).
- Mohsin Habib & Leon Zurawicki, 2002. "Corruption and Foreign Direct Investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 33(2), pages 291-307, June.
- Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
- Robert E. Hall & Charles I. Jones, 1998. "Why Do Some Countries Produce So Much More Output per Worker than Others?"," Working Papers 98007, Stanford University, Department of Economics.
- Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
- Keith E. Maskus, 1993. "Intellectual property rights and the Uruguay Round," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 10-25.
- Kaufmann, Daniel & Kraay, Aart & Zoido-Lobaton, Pablo, 1999. "Aggregating governance indicators," Policy Research Working Paper Series 2195, The World Bank.
- Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
- Javorcik, Beata, 1999. "Composition of Foreign Direct Investment and Protection of Intellectual Property Rights in Transition Economies," CEPR Discussion Papers 2228, C.E.P.R. Discussion Papers. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:27327. 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: (Joachim Winter)
If references are entirely missing, you can add them using this form.