IDEAS home Printed from https://ideas.repec.org/a/cii/cepiie/2011-q4-128-3.html
   My bibliography  Save this article

How does religion bias the allocation of Foreign Direct Investment? The role of institutions

Author

Listed:
  • Jérôme Hergueux

Abstract

We construct a gravity model of worldwide foreign direct investment stock (FDI) in order to study the effect of religion on FDI allocation. We establish empirically that both bilateral religious similarity and bilateral religious diversity foster FDI at the country pair level. These apparently contradicting results confirm an empirical puzzle that has already emerged in the literature, particularly in the case of trade in goods. We investigate whether the answer to this puzzle could lie on the fact that the effect of these two variables play for different types of countries, depending on the level of efficiency of their institutions.

Suggested Citation

  • Jérôme Hergueux, 2011. "How does religion bias the allocation of Foreign Direct Investment? The role of institutions," International Economics, CEPII research center, issue 128, pages 53-76.
    • Handle: RePEc:cii:cepiie:2011-q4-128-3
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S2110701713600037
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yann Algan & Pierre Cahuc, 2010. "Inherited Trust and Growth," American Economic Review, American Economic Association, vol. 100(5), pages 2060-2092, December.
    2. Hong, Seiwoong & Lee, Junyong & Oh, Frederick Dongchuhl & Shin, Donglim, 2023. "Religion and foreign direct investment," International Business Review, Elsevier, vol. 32(1).
    3. Johan Fourie & Jaume Rosselló & Maria Santana-Gallego, 2015. "Religion, Religious Diversity and Tourism," Kyklos, Wiley Blackwell, vol. 68(1), pages 51-64, February.
    4. repec:hal:spmain:info:hdl:2441/432sbils8u9t7qa99cii5psht1 is not listed on IDEAS
    5. Prasadh, R. Shyaam & Thenmozhi, M., 2019. "Does religion affect cross-border acquisitions? Tales from developed and emerging economies," Finance Research Letters, Elsevier, vol. 31(C).
    6. Jasmine Mondolo, 2018. "How do informal institutions influence inward FDI? A systematic review," "Marco Fanno" Working Papers 0218, Dipartimento di Scienze Economiche "Marco Fanno".
    7. repec:spo:wpmain:info:hdl:2441/432sbils8u9t7qa99cii5psht1 is not listed on IDEAS
    8. James Okrah & Alexander N. Nepp, 2023. "The Impact of Religious Traditions and Education Levels on Innovation Activity in Countries with Different Income Levels," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 22(2), pages 216-241.
    9. Yann Algan & Pierre Cahuc, 2010. "Inherited Trust and Growth," American Economic Review, American Economic Association, vol. 100(5), pages 2060-2092, December.
    10. Jasmine Mondolo, 2019. "How do informal institutions influence inward FDI? A systematic review," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(1), pages 167-204, April.
    11. Wen-Xi Ruan & Xin Yu & Sheng-Yuan Wang & Tian-Cheng Zhao & Ya-Zhen Liu, 2022. "Exploration of China–ASEAN Trade Relations in the Context of Sustainable Economic Development—Based on the Lotka–Volterra Model," Sustainability, MDPI, vol. 15(1), pages 1-22, December.
    12. Dinithi N. Jayasekara & Jonathan H. W. Tan, 2024. "How do intercultural proximity and social fragmentation promote international patent cooperation?," Small Business Economics, Springer, vol. 63(1), pages 421-445, June.
    13. Lee, Junyong & Lee, Kyounghun & Oh, Frederick Dongchuhl, 2023. "International portfolio diversification and the home bias puzzle," Research in International Business and Finance, Elsevier, vol. 64(C).
    14. Junyong Lee & Kyounghun Lee & Frederick Dongchuhl Oh, 2023. "Religion and Equity Home Bias," Open Economies Review, Springer, vol. 34(5), pages 1015-1038, November.

    More about this item

    Keywords

    Culture; Religion; Institutions; Trust; Foreign Direct Investment;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cii:cepiie:2011-q4-128-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/cepiifr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.