Correlation Between the Index of Economic Freedom and Foreign Direct Investment in 174 Countries

Abstract

The research objective was to correlate the Economic Freedom Index (ILE) and Foreign Direct Investment (FDI), the methodology was descriptive and correlational. The hypothesis was that the increase in (ILE) increases (IED). The results conclude: a) Both variables have positive asymmetry (figure 3), (figure 4), (figure 5), (figure 6). b) The Pareto Analysis (table 2) shows that 80% of the world's FDI; It is maintained in 27 countries, of which 18 have an ILE greater than 50% and represent 39% of the world's FDI and 9 have an ILE between 40% and 49%, and represent 41% of the world's FDI, integrated mainly by China, Brazil and India. c) The correlation analysis shows that 100 countries have a positive coefficient (+) and 76 countries a negative coefficient (-), therefore the hypothesis is partially accepted because there are countries like China, Brazil and India that attract FDI with an index of freedom economic less than 50%. The conclusion is that for a country to be attractive to FDI, managers must implement a process of economic freedoms that leads them to exceed the rate of at least 50% or more.