Institutional Factors of Enhancing the Attraction of Foreign Direct Investment in the Economies of Developing Countries

被引:0
|
作者
Drapkin, I. M. [1 ,2 ]
Mariev, O. S. [2 ]
Galenkova, A. D. [3 ]
机构
[1] Ural Fed Univ, Grad Sch Econ & Management, Econ, 19 Mira St, Ekaterinburg 620002, Russia
[2] Ural Fed Univ, Grad Sch Econ & Management, Acad Dept Econometr & Stat, 19 Mira St, Ekaterinburg 620002, Russia
[3] Ural Fed Univ, 19 Mira St, Ekaterinburg 620002, Russia
来源
EKONOMIKA REGIONA-ECONOMY OF REGION | 2019年 / 15卷 / 03期
关键词
foreign direct investment; institutional factors; developing countries; economic development; econometric analysis; panel data; index of economic freedom; state insolvency index; threshold value; level of development of a country; DETERMINANTS; INFLOWS; FDI; QUALITY;
D O I
10.17059/2019-3-24
中图分类号
K9 [地理];
学科分类号
0705 ;
摘要
Permanent inflow of foreign direct investment is a powerful driver of economic development in developing countries. However, the country's underdeveloped institutional environment imposes additional costs on the investors. We identified the specificity of the institutional environment's impact on attracting foreign direct investment (FDI) in developing countries with different levels of economic development. Based on the heterogeneity of the studied countries, we hypothesised that in developing countries institutions become an active determinant of FDI after exceeding a certain threshold. In other words, institutional factors do not affect FDI inflows into relatively underdeveloped countries among a group of developing countries whose level of economic development does not exceed the threshold. To test this hypothesis, we simulated an intra-group economic modelling based on the data of the World Bank, the Heritage Foundation and the For Peace Foundation for the period from 2005 to 2015. The main tool of econometric analysis was a panel regression with fixed effects at the country level and a two-step least squares method with instrumental variables. We used indices of economic freedom and the state insolvency as aggregated indicators of the non-overlapping groups of institutional factors. The study's main results have confirmed the hypothesis that institutional factors affect FDI inflows only in the countries where gross national income per capita is higher than average. Moreover, we defined the threshold value of gross national income per capita that a country needs to achieve in order to make any institutional changes to enhance FDI inflows. Thus, government policies, aimed at increasing the developing countries' attractiveness for foreign investors, should firstly take into account the level of economic development of the recipient country.
引用
收藏
页码:952 / 966
页数:15
相关论文
共 50 条
  • [21] Foreign Direct Investment and Labor Quality in Developing Countries
    Iwai, Nobuyuki
    Thompson, Stanley R.
    REVIEW OF DEVELOPMENT ECONOMICS, 2012, 16 (02) : 276 - 290
  • [22] Trade, Foreign Direct Investment and Agriculture in Developing Countries
    Badu-Prah, Charlotte
    Agyeiwaa-Afrane, Akua
    Gidiglo, Ferguson K.
    Srofenyoh, Francis Y.
    Agyei-Henaku, Kofi Aaron A. -O.
    Djokoto, Justice Gameli
    RESEARCH ON WORLD AGRICULTURAL ECONOMY, 2023, 4 (03):
  • [23] The costs of inward direct foreign investment to developing countries
    Gazioglou, S
    McCausland, WD
    APPLIED ECONOMICS LETTERS, 2002, 9 (08) : 505 - 510
  • [24] Macroeconomic and Institutional Determinants of Foreign Direct Investment in SAARC Countries
    Kumar, Jai
    Xi, Chen
    Kumari, Joti
    Huang, Jinyan
    PROBLEMY EKOROZWOJU, 2025, 20 (01): : 271 - 287
  • [25] Institutional Quality in Attracting Foreign Direct Investment to Small Countries
    Masron, Tajul Ariffin
    Naseem, N. A. M.
    Wahab, Effiezal Aswadi Abdul
    MALAYSIAN JOURNAL OF ECONOMIC STUDIES, 2018, 55 (02) : 267 - 284
  • [26] Factors Affecting Foreign Direct Investment and Economic Performance in Developing Economies: Evidence from Vietnam
    Do, Manh Hung
    Park, Sang Chul
    INTERNATIONAL JOURNAL OF PUBLIC ADMINISTRATION, 2022, 45 (01) : 64 - 80
  • [27] Foreign Direct Investment in Ukraine: the Role of Institutional Factors
    Buszko, Andrzej
    Vashchenko, Mykola
    EKONOMISTA, 2012, (04): : 515 - 527
  • [28] Institutional and macro economic policy factors on foreign direct investment: South Asian countries case
    Azam, Muhammad
    Khan, Hashim
    Hunjra, A. Imran
    Ahmad, H. Mushtaq
    Chani, M. Irfan
    AFRICAN JOURNAL OF BUSINESS MANAGEMENT, 2011, 5 (11): : 4306 - 4313
  • [29] International migration, foreign direct investment, and development stage in developing economies
    Phyo, Ei Ei
    Goto, Hideaki
    Kakinaka, Makoto
    REVIEW OF DEVELOPMENT ECONOMICS, 2019, 23 (02) : 940 - 956
  • [30] Foreign Direct Investment and Economic Growth: The Case of Developing African Economies
    Mebratu Seyoum
    Renshui Wu
    Jihong Lin
    Social Indicators Research, 2015, 122 : 45 - 64