Relationship between Institutional Factors and FDI Flows in Developing Countries: New Evidence from Dynamic Panel Estimation

Kurul, Zühal; Yalta, A. Yasemin

doi:10.3390/economies5020017

Cited by 88 publications

(68 citation statements)

References 42 publications

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“…This estimator resolves some of the small-sample biases of the standard GMM estimator without enforcing particularly strong assumptions [53]. This estimator creates a system of two equations; the first equation is differenced while the second one remains in levels [54]. Also, in addition to the corrections for serial correlations, measurement error and endogeneity also accounted for the underlying data dynamics [55].…”

Section: Econometric Model and Estimation Methodsmentioning

confidence: 99%

Terrorism as a Determinant of Attracting FDI in Tourism: Panel Analysis

Radić

2018

Sustainability

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The aim of this paper is to investigate whether terrorism is one of the important determinants affecting the investment decisions of foreign investors in tourism on a panel of 50 countries over the period 2000 to 2016. In addition to terrorism, the importance of three other theoretically significant determinants of attracting foreign direct investment (FDI) in tourism are explored—the previous level of FDI in tourism, the level of GDP and the international tourist arrivals. To obtain more reliable research results, the initial model is extended with certain control variables. The study uses system-GMM estimator for dynamic panel data models. The research results of a narrower and a wider model indicate that terrorism has no significant effect on the FDI inflow in tourism while international tourist arrivals significantly affect the future FDI in tourism in both models. Furthermore, the research results entail certain political connotations. In order to attract foreign investors in tourism, the most important factor is to ensure a stable macroeconomic environment with a competitive position in the Doing Business list and what better business conditions. Attention should also be focused on the security and preventive counter-terrorism, which will ensure that potential destinations reflect confidence, have a growth rate of tourist arrivals and, consequently, attract foreign investors.

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Section: Econometric Model and Estimation Methodsmentioning

confidence: 99%

Terrorism as a Determinant of Attracting FDI in Tourism: Panel Analysis

Radić

2018

Sustainability

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“…Such as, Gangi and Abdulrazak (2012) showed a positive relationship between voice and accountability and inward FDI. Similarly, Kurul and Yalta (2017) used the dynamic panel approach on 113 developing countries and concluded that voice and accountability has a positive and significant impact on FDI inflows. Moreover, Aidt, Dutta and Sena (2008) argue that if there is proper accountability of the politicians in a country, it reduced corruption, and thus FDI is increased.…”

Section: Voice and Accountability And Fdimentioning

confidence: 99%

Institutional Governance and Foreign Direct Investments: Evidence from South Asian Emerging Markets

Naseem¹

2021

PSSR

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The current study investigated the effect of institutional governance on foreign direct investment inflows in five South Asian emerging countries for the period of 1996-2017. The results of the Housman's specification test support the fixed effects model could better fit the data. The estimated results showed that a governance variable such as control of corruption has positive and significant whereas, political stability, regulatory quality, and voice and accountability have a negative and significant impact on foreign direct investments. Moreover, the results of the market size have significant negative, whereas, level of development and trade openness is found to have a significant and positive effect on foreign direct investments. These results have important policy implications for South Asian emerging countries. The results suggest that countries should improve the quality of their business and institutional environment that would create an attraction for foreign investors.

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“…Using OLS or fixed effect model we have to admit that results are potentially inconsistent and biased due to endogeneity problem between independent and explanatory variables. The endogeneity problem can be reducing by adopting the instrumental variables (IV) approach Kurul & Yalta (2017). But due to weak instruments the OLS approach estimators are likely to be biased to similar to fixed effect (FE) estimator.…”

Section: Main Modelsmentioning

confidence: 99%