Political Stability and Foreign Direct Investment

Kim, Haksoon

doi:10.5539/ijef.v2n3p59

Cited by 69 publications

(58 citation statements)

References 20 publications

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“…However, the finding is in line with other strand of literature that records a deleterious role of institutional quality in inward FDI (e.g. Kim, 2010). One possible explanation for this inverse relationship lies in the existence of the highly needed but scarce natural resources such as precious metals that justify the risk undertaken by investors in these regions.…”

Section: Effect Of General Institutions On Inward Fdisupporting

confidence: 81%

“…The latter, in particular, using a panel for 164 countries over the period 1996-2006, provide evidence that one standard deviation change in institutional quality improves FDI inflows by a factor of 1.69. On the other hand, a recent study by Kim (2010) documents evidence in support of the argument that countries with high level of corruption of government and low level of democracy have higher FDI inflows while being lower for those with greater political rights. Still others such as Onyeiwu and Hemanta (2004) find no significant relationship between the quality of institutions and inward FDI.…”

Section: Related Literaturementioning

confidence: 84%

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Institutions and Foreign Direct Investment: Evidence from Sub-Saharan Africa Regions

Bbale¹,

Nnyanzi

2016

JSD

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The paper set out to investigate the nexus between institutional quality and inward FDI and how the presence of liberalization and financial development influence this linkage. We build on Dunning's eclectic paradigm that focuses on locational advantages. A fixed effects approach is employed and the estimation results confirm the crucial role of institutional quality in attracting FDI inflows. However the impact varies with the particular group. In particular, apart from SADC, institutional quality seems to matter significantly in all the other groups especially in EAC and ECOWAS. Additional findings reveal a mixed impact regarding the presence of financial development and liberalization in the institution-FDI nexus: While Trade liberalization policies seem to be at the forefront in ECOWAS and SADC groups, it is credit depth and capital account openness that appear to matter most in EAC. We confirm the resilience of inward FDI during the global crisis and document a positive significant relationship between FDI inflows on the one hand and host market size and infrastructure development on the other. While a one-size-fits-all-policy should be discouraged due to the heterogeneous nature of SSA countries, overall, a comprehensive set of policies designed with caution to improve the institutional quality, the financial system, trade openness and capital account liberalization would be valuable for attracting FDI inflows to SSA.

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Section: Effect Of General Institutions On Inward Fdisupporting

confidence: 81%

Section: Related Literaturementioning

confidence: 84%

Institutions and Foreign Direct Investment: Evidence from Sub-Saharan Africa Regions

Bbale¹,

Nnyanzi

2016

JSD

View full text Add to dashboard Cite

show abstract

“…Therefore, it is noteworthy to revisit these relationships and test whether FDI inflows is affected somehow by corruption and political stability. Taking into consideration that the measures here are quite different than what Kim (2010) in constructing the political stability variable.…”

Section: Political Stabilitymentioning

confidence: 99%

“…However, this stands at odd with what Kaufmann et al (2002) have argued that corruption is negatively related to FDI inflows, as well as the findings of Globerman and Shapiro (2003) that corruption harms countries and therefore play negative role in the overall evaluation of a country's governance infrastructure, thus lead to lower levels of FDI inflows. Kim (2010) also argues that political stability, which he measured by the political rights, have negative relationship with FDI inflows. Therefore, it is noteworthy to revisit these relationships and test whether FDI inflows is affected somehow by corruption and political stability.…”

Section: Political Stabilitymentioning

confidence: 99%

“…Thus, political stability can play significant role in pushing forwards the economic development of a country. Kim (2010) studied the relationship between FDI inwards and political stability, as well as the level of corruption. Interestingly, he found a positive relationship between corruption and FDI inflows, indicating that countries where governments have higher levels of corruption are more likely to receive FDI than countries with lower levels of corruption.…”

Section: Political Stabilitymentioning

confidence: 99%

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Governance, Regulations, Trade Openness and FDI Inflows: Empirical Study

Al‐Shammari

Hammoudeh

Pavlovic

2015

IJEF

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Governance effectiveness and regulation quality have been drawing the attention in the international business arena, yet, there has not been a consensus findings regarding its potential impact on the FDI inflows. In this paper, we examine the possible links between the governments' effectiveness and their regulation quality and the amount of FDI inflows using the existing literature and theories in the economic and international business fields. We find that regulation quality, control of corruption, and trade openness have mixed results, suggesting that further exploration is needed in this field. Results are explained and future directions are suggested based upon the empirical findings.

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The impact of foreign direct investment on the economic development of emerging countries of the European Union

2021

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Starting from the premise that the impact of foreign direct investment (FDI) on the economies of the host countries is different from one economy to another, the aim is to evaluate the impact of a set of economic and social indicators on FDI and net income (% GDP-Gross Domestic Product) in emerging, ex-socialist countries of the European Union. Using econometric models, we analysed the relationship between the evolution of the net FDI inflows and a number of statistical indicators. Our findings proved that there are similarities between the countries analysed, in terms of the evolution of net FDI inflows, with some differences being recorded for Hungary, where the evolution of net FDI inflows has major fluctuations. We found that the countries present both similarities and differences in terms of variables that affect FDI. The FDI net inflows (% GDP) are in seven, out of nine economies, positively influenced by GDP, as it follows: Bulgaria, Lithuania and Slovenia are FDI attractive by an increasing GDP rate, while Latvia, Poland and Romania react to a better GDP per capita. Hungary is the only one that is positively influenced by both GDP rate and GDP per capita. Moreover, a decreasing corruption perception index, country risk rating, income tax (% of commercial profit) and other taxes paid by companies (% commercial profit) can positively influence the inflows of FDIs in some of the analysed countries.

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Political Stability and Foreign Direct Investment

Cited by 69 publications

References 20 publications

Institutions and Foreign Direct Investment: Evidence from Sub-Saharan Africa Regions

Institutions and Foreign Direct Investment: Evidence from Sub-Saharan Africa Regions

Governance, Regulations, Trade Openness and FDI Inflows: Empirical Study

The impact of foreign direct investment on the economic development of emerging countries of the European Union

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