No abstract

This article presents panel data estimates of the relationship between indicators of governance and foreign direct investment (FDI) using a sample of countries from Asia and Latin America. While controlling for standard FDI variables, the results provide strong confirmation that the rule of law; control of corruption; regulatory quality; government effectiveness and political stability are positively correlated with FDI.

Various studies in the past have examined the effect of foreign direct investment on economic growth of both developed and developing countries. However, research on the influence of foreign direct investment on an expanded conception of socio-economic progress such as human development is absent. In this article, we examine the effect of foreign direct investment on human development (measured by the human development index) for middle and low-income countries for the period from 1975 to 1999 to fill in this lacuna. Regression results of a fixed effects model indicate a positive effect of foreign direct investment on human development for both the groups of countries.

This paper examines whether governance matters for the economic growth of developing countries, empirically captured within the institutional economics theoretical framework using the panel data estimation procedure. In doing so, it tests the effect of several dimensions of governance on the growth of 84 low and middle-income economies using regression specifications common in the growth literature. The empirical results show that political stability and government effectiveness is significantly positively correlated with growth. Voice and accountability and corruption are statistically significantly negatively correlated with growth. The regulatory quality and rule of law dimensions of governance are negatively but statistically insignificantly correlated with growth. The findings of this study imply that the dynamics of the current modern economy makes it necessary for developing countries to act now and within their own country, improve the dimensions of governance and establish good governance practices that are domestically relevant and internationally comparable and consistent. necessary for developing countries to act now and within their own country, establish good governance practices that are domestically relevant and internationally comparable and consistent.

The international tourism industry is booming, giving many developing nations unprecedented opportunity in trade. But for some developing nations, law and order problems appear to have obstructed growth in tourism. With little attention in the literature given to the influences of safety considerations for tourist demand, this paper investigates the deterrent effect of crime on tourism in developing island economies of the South Pacific and Caribbean. Using annual time-series data, a simple country-specific model is estimated. The empirical results confirm the importance of crime levels as a hindrance to the demand for tourism, the inference being that news of a deteriorating law and order situation in destination countries is being successfully disseminated to potential tourists in source countries despite the general inaccessibility of up-to-date crime statistics.