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Institutions, macroeconomic policy and foreign direct investment: South Asian countries case

Author

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  • Azam, Muhammad
  • Khan, Hashim
  • Hunjra, Ahmed Imran
  • Ahmad, H. Mushtaq
  • Chani, Muhammad Irfan

Abstract

Recent economic literature suggests that institutional quality factors exerted positive effect on foreign direct investment (FDI) inflows. The main focus of this study is to examine the role of institutional factors and macro economic policy factors on FDI inflows in a panel data of seven South Asian countries over the period of 12 years since 1996-2007. This study implies that a good institutional quality plays a key role in attractiveness of FDI inflows. A poor macroeconomic policy situation produces negative impact on FDI. Good Institutional quality and macroeconomic policy generate negative in a combined form on FDI. This study further implies that poor economic policy deteriorates institutional quality and creates negative effect on FDI inflows. Incredibility in trade liberalization policy may be a part of poor macro economic policy.

Suggested Citation

  • Azam, Muhammad & Khan, Hashim & Hunjra, Ahmed Imran & Ahmad, H. Mushtaq & Chani, Muhammad Irfan, 2011. "Institutions, macroeconomic policy and foreign direct investment: South Asian countries case," MPRA Paper 32480, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:32480
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    References listed on IDEAS

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    Cited by:

    1. Azam, Rauf i & Batool, Iram & Imran, Rabia & Chani, Muhammad Irfan & Hunjra, Ahmed Imran & Jasra, Javed Mahmood, 2010. "Financial crises and economic growth in Pakistan: a time series analysis," MPRA Paper 40691, University Library of Munich, Germany.

    More about this item

    Keywords

    Institutional quality; Macro economic policy; Attractiveness; Incredibility; South Asia;

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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