Investigating the Impact of Institutional Quality on FDI: Are There Promotional Effects in Economic Integration Regions?

Chen, Fuzhong; Guo-hai, Jiang

doi:10.3390/su132011309

Cited by 11 publications

(5 citation statements)

References 54 publications

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“…In the field of environmental research, numerous studies, like [ 11 ] and [ 30 ] used this indicator. [ 52 ] examined the relationship between institutional quality, economic growth, and foreign direct investment by using panel data to conduct their research. This study uses the methodology proposed [ 52 ]for the analysis of panel data, and as a result, the empirical baseline model equation can be stated as follows: …”

Section: Methodsmentioning

confidence: 99%

Dose institutional quality influences the relationship between urbanization and CO2 emissions?

Khan,

Chen,

Bibi

et al. 2023

PLoS ONE

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As a result of rapid economic expansion, increased energy use, and urbanization, global warming and climate change have become serious challenges in recent decades. Institutional quality can be the remedy to impede the harmful effect of factors on environmental quality. This study investigates the impact that urbanization and institutional quality on environmental quality in in the Belt and Road Initiative (BRI) countries from 2002 to 2019. By using two step generalized method of moment, the findings shows that urbanization leads to an increase in carbon dioxide emissions and a decline in environmental quality. On the other hand, the square term of urbanization indicates that an increase in urbanization leads to a reduction in emissions at a later stage after reach a certain level. Education, on the other hand, has the reverse impact of increasing carbon emissions; economic growth, foreign direct investment, and government effectiveness all boost carbon emissions. In a similar vein, the interaction between urbanization and the effectiveness of the government is unfavorable, underscoring the transformative role that the effectiveness of the government plays in leading to environmental sustainability. Finally, the findings of this study have considerable policy implication for the sample countries.

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Section: Methodsmentioning

confidence: 99%

Dose institutional quality influences the relationship between urbanization and CO2 emissions?

Khan,

Chen,

Bibi

et al. 2023

PLoS ONE

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“…In addition, the quality of institutions determines inward Foreign Direct Investment (FDI). In relation to this, Owusu-Nantwi (2019), Yakubu (2020) and Chen and Jiang (2021) indicate that better institutional quality contributes to attract more FDI. In a study based on a cross-country comparison of economic performance, Gwartney (2009) highlighted the importance of economic freedom on private investment.…”

Section: Literature Review 21 Theoretical Considerationmentioning

confidence: 96%

“…(2018) having analyzed data for 29 emerging countries show that improving institutional quality would attract more foreign investment and make competition with local firms fiercer. Chen and Jiang (2021) examined the effect of institutional quality in a panel of 117 countries by employing the panel GMM model for analysis. The findings of the study show that improvement in institutional quality positively impacts FDI.…”

Section: Literature Reviewmentioning

confidence: 99%

Investment and economic growth: do institutions and economic freedom matter?

Addi

Abubakar

2022

IJOEM

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PurposeThis paper analyzes the effect of institutional quality and economic freedom on investment and economic growth in sub-Saharan Africa (SSA).Design/methodology/approachFocusing on a panel of 27 countries, the study employed the panel fixed and random effect models to analyze data spanning from 2005 to 2018. The study also employed the Wu–Hausman test to determine if the endogeneity problem exists in the model.FindingsThe findings of the study show that individually, an improvement in economic freedom stimulates economic growth while the improvement in institutional quality is effective in spurring investment. However, the interaction effect of improvement in institutional quality and economic freedom is the stimulation of both investment and economic growth. The findings are robust to alternative model specifications.Practical implicationsThe study implies that for SSA countries to effectively achieve higher investment and economic growth outcomes, there is the need to simultaneously strengthen institutional quality and improve economic freedom. Focusing on either of the factors without the other leads to less desirable growth and investment outcomes.Originality/valueThe study examined the combined influence of institutional quality and economic freedom on investment and growth in SSA. To the best of the authors’ knowledge, no study has investigated this in the context of SSA.

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“…A study involving 28 EU member states by Dobrowolska, Dorożyński and Kuna-Marszałek (2021) revealed a significant relationship between institutional quality and FDI inflows. Chen and Jiang (2021) found that in 42 G20 countries, institutional quality attracted FDI inflows by increasing trade openness, accelerating industrial structure optimization and encouraging technological innovation.…”

Section: Empirical Reviewmentioning

confidence: 99%

“…Some studies investigating the role of institutional quality variables on FDI inflows have been carried out in some economic blocs outside the ECOWAS with varying outcomes. Such studies include the work of Dobrowolska, Dorożyński and Kuna-Marszałek (2021) on 28 EU member states as well as a study by Chen and Jiang (2021) for 42 G20 countries. The study by Oshota and Wahab (2022) concentrated on the impact of institutional quality variables on trade flows in the ECOWAS countries.…”

Section: Introductionmentioning

confidence: 99%

Regulatory Quality, Rule of Law and Foreign Direct Investment Inflows: Evidence from the Economic Community of West African States

Nzeh,

Okoli,

Ozoh

et al. 2024

IJFEB

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In literature, the role of institutions in stimulating FDI inflows has been documented. This study examined the contributions of two institutional-quality variables, regulatory quality and the rule of law, in attracting FDI in the Economic Community of West African States (ECOWAS). The study used an annual series covering the period from 2000 to 2020 using three different estimation techniques: the panel ARDL, the panel FMOLS, and the panel DOLS. Findings reveal that while the rule of law had a negative and significant impact on FDI inflows under the panel ARDL and FMOLS, the impact of regulatory quality was negative and significant under the panel ARDL and DOLS. The short-run ARDL results revealed that only the population growth rate positively and significantly impacted FDI inflows. However, in the long run, findings showed that while the population growth rate had a positive and significant impact on FDI inflows under the ARDL, the impact of GDP was positive and significant in all the models. The exchange rate was also found to negatively and significantly impact FDI inflows in all the models. The study consequently recommends building strong institutions through collaboration among the member countries while improving human capital and economic growth.

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Investigating the Impact of Institutional Quality on FDI: Are There Promotional Effects in Economic Integration Regions?

Cited by 11 publications

References 54 publications

Dose institutional quality influences the relationship between urbanization and CO2 emissions?

Dose institutional quality influences the relationship between urbanization and CO2 emissions?

Investment and economic growth: do institutions and economic freedom matter?

Regulatory Quality, Rule of Law and Foreign Direct Investment Inflows: Evidence from the Economic Community of West African States

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