Free Market Institutions and FDI Performance in Emerging Asian Economies

Abstract

This paper examines long-term developments in the quality and efficiency of free market institutional systems across thirteen emerging economies from South, South-east, and East Asia over the 1995-2014 period. The paper also empirically assesses the impact of free market institutions on a country's inward foreign direct investment (FDI) performance. We find that the free market institutional framework in most economies is still relatively inefficient, restrictive, and underdeveloped but has, nevertheless, substantially improved during the last twenty-year period. Our empirical results also indicate that a free market institutional system in a host-country is a factor that attracts inward FDI to emerging Asian economies by multinational companies. Consequently, policy makers should focus on further improving the quality of free market institutions.

RETRACTED: Is the interaction of commercial regulation with foreign direct investment a source of Heaven or EKC hypothesis? An empirical investigation of the BRICS region

“…Countries with higher-quality institutions are more likely to be successful in luring foreign direct investment into their industrial sectors (Ju and Wei, 2010). According to (Vogiatzoglou, 2016), institutional characteristics are the most important factors in determining foreign direct investment in developing nations. The domestic bureaucracy becomes less efficient due to corruption, which works as a tax on immigrants from other countries (Zheng et al, 2022).…”