Japan's FDI drivers in a time of financial uncertainty. New evidence based on Bayesian Model Averaging

Camarero, Mariam; Moliner, Sergi; Tamarit, Cecilio

doi:10.1016/j.japwor.2021.101058

Cited by 15 publications

(8 citation statements)

References 69 publications

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“…The latest empirical findings support the notion that foreign investors are drawn to that institutional quality because it lowers application expenses and makes doing business in the host country simpler. Poor institutions, on the other hand, obstruct FDI and might operate as a tax, raising the cost of FDI [31]. Since these factors raise the cost of doing business [32,33], investors are wary of making investments in countries where institutions encourage corruption, nepotism, and bureaucracy.…”

Section: Resultsmentioning

confidence: 99%

The Impact of Institutional Quality on Sectoral Foreign Direct Investment in Pakistan: A Dynamic Simulated ARDL Approach

Khan

et al. 2023

Sustainability

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Capital is needed to accelerate the development process, but developing nations struggle with minimum resources. Since foreign direct investment (FDI) is essential to solve the funding shortage, developing nations make every effort to attract FDI to their countries. This study was conducted to explore the impact of institutional quality on sectoral FDI in Pakistan using time series data for the period from 1986 to 2019. To create a solid foundation for policy formulation, this study developed a single measure of institutional quality by utilizing a wide range of institutional indicators. It evaluates the impact of overall institution quality on sector-level FDI and examines the causal relationship between institutions and sectoral FDI with a clear focus on a single-country analysis. The dynamic simulated autoregressive distributed lag technique was employed to explore the impact of institutional quality and other factors on FDI. The results of the study explained that institutional quality and TO have a positive and significant effect on the FDI of the primary FDI sector at 5%, while in the case of the secondary sector, the effect of institutional quality, HDI and GDP on FDI inflow is significant at 10% and TO has a significant effect on secondary sector FDI at 5%. In addition, institutional quality and GDP have a positive relationship with tertiary sector FDI at 5%. The empirical findings show that higher institutional quality in emerging economies such as Pakistan encourages large transfers of technological advances through FDI, increasing the overall performance of the economy. This study found that institutional quality significantly increases sectoral FDI in Pakistan. Finally, this study prescribes some policy measures to increase FDI based on the findings.

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Section: Resultsmentioning

confidence: 99%

The Impact of Institutional Quality on Sectoral Foreign Direct Investment in Pakistan: A Dynamic Simulated ARDL Approach

Khan

et al. 2023

Sustainability

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“…The present empirical results are consistent with idea that Institutional quality is interesting for foreign investor because it deceases implementation cost and make doing business easy in host countries. While, poor institutions impede FDI and can act like a tax, thus increasing the cost of FDI (Camarero et al, 2021). Investors are unwilling to invest in countries where institutions encourage corruption, nepotism and red tape because these factors increase the cost of doing business (Cicatiello et al, 2021) (Rehman et al 2020a, Rehman et al 2019).…”

Section: Resultsmentioning

confidence: 99%

Symmetric and Asymmetric Nexus between Institutional Quality and Sectorial Foreign Direct Investment Inflow in India: A Fresh Insight Using Simulated Dynamic ARDL Approach

Rehman¹,

Sohag²,

Ahmad³

2021

Preprint

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This study investigates the bidirectional causal relationship between institutional quality and aggregated and disaggregated (primary, secondary and services sector) FDI inflow in India by employing new simulated autoregressive distributed lag (SARDL) dynamic techniques, which is an extended version of NARDL and ARDL. The empirical results supports that institutional quality strongly attract aggregated and disaggregated FDI and reversely FDI enhance the quality of institutions. The nexus between FDI inflow and institutional quality is good news for India to enhance the institutional quality and catch-up on advanced economies. The empirical findings detect cointegration and bidirectional causal-relationship between aggregated FDI and institutional quality.

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“…The current empirical results are in line with the idea that institutional quality is interesting for foreign investors because it decreases the implementation cost and makes doing business easy in host countries. Meanwhile, inadequate institutions impede FDI, and its effects are similar to a tax, increasing FDI opportunity cost [7]. Investors are unwilling to invest in a country that has poor institutional quality where there is a culture of red tape, nepotism, and corruption because these factors increase business operational costs [9,48,55].…”

Section: Resultsmentioning

confidence: 99%

“…Foreign investors are interested in institutional quality because it deceases the business implementation and operational costs in host countries. Meanwhile, poor institutions discourage FDI inflow, such as taxes, thus increasing the FDI opportunity cost [7,8]. Investors hesitate and are discouraged from investing in countries where red tape, nepotism, and corruption are encouraged by institutions because these are the determinants of business operational costs [9,10].…”

Section: Introductionmentioning

confidence: 99%

Asymmetric and Symmetric Link between Quality of Institutions and Sectorial Foreign Direct Investment Inflow in India: A Fresh Insight Using Simulated Dynamic ARDL Approach

et al. 2021

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This study explores the bicausality between institutional quality and FDI inflow both aggregated and sector-wise, i.e., the agricultural, manufacturing, and tertiary sectors in the Indian economy, by applying simulated autoregressive distributed lag (SARDL) dynamic new techniques, an extended variant of orthodox ARDL and NARDL. The study confirms that aggregated and sectorial FDI are enhanced by adequate institutional quality, and similarly, FDI promotes quality institutions. The nexus between institutional quality and FDI inflow is an inspiration for India to compete with developed economies by enhancing its institutional quality. The study observes cointegration and bidirectional causality between institutional quality and aggregated FDI.

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Japan's FDI drivers in a time of financial uncertainty. New evidence based on Bayesian Model Averaging

Cited by 15 publications

References 69 publications

The Impact of Institutional Quality on Sectoral Foreign Direct Investment in Pakistan: A Dynamic Simulated ARDL Approach

The Impact of Institutional Quality on Sectoral Foreign Direct Investment in Pakistan: A Dynamic Simulated ARDL Approach

Symmetric and Asymmetric Nexus between Institutional Quality and Sectorial Foreign Direct Investment Inflow in India: A Fresh Insight Using Simulated Dynamic ARDL Approach

Asymmetric and Symmetric Link between Quality of Institutions and Sectorial Foreign Direct Investment Inflow in India: A Fresh Insight Using Simulated Dynamic ARDL Approach

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