2019
DOI: 10.1108/jeas-03-2018-0034
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Foreign direct investment and institutional quality: empirical evidence from South America

Abstract: Purpose The purpose of this paper is to investigate the effect of institutional quality on foreign direct investment (FDI) flows in South America. Design/methodology/approach The study uses two-stage least squares (2SLS) and fixed effect ordinary least squares regression analyses to examine the relationship between institutional quality and FDI in South America. Findings The study finds a significant positive relationship between institutional quality index and FDI. This implies that improvements in the in… Show more

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Cited by 16 publications
(15 citation statements)
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“…The finding thus confirms the institutional theory by North (1990) highlighting the significant link between institutional quality and FDI inflows. The result is also consistent with prior empirical findings (Ajide et al, 2014;Esew and Yaroson, 2014;Owusu-Nantwi, 2019). GDP per capita growth is positively associated with FDI suggesting that economic growth motivates FDI inflows.…”
Section: Discussion Of Resultssupporting
confidence: 92%
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“…The finding thus confirms the institutional theory by North (1990) highlighting the significant link between institutional quality and FDI inflows. The result is also consistent with prior empirical findings (Ajide et al, 2014;Esew and Yaroson, 2014;Owusu-Nantwi, 2019). GDP per capita growth is positively associated with FDI suggesting that economic growth motivates FDI inflows.…”
Section: Discussion Of Resultssupporting
confidence: 92%
“…The results of the long-run estimates indicate a positive significant relationship between institutional quality and FDI, implying that strong institutions have substantial effects on FDI inflows in Ghana. This evidence lends support to the argument that effective institutional quality creates a conducive investment climate impacting positively on FDI inflows (Peres et al, 2018;Owusu-Nantwi, 2019). The significant impact of institutional quality on FDI can be attributed to the stringent efforts undertaken by the Government of Ghana in recent years in strengthening Ghana's institutional structures.…”
Section: Discussion Of Resultssupporting
confidence: 63%
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