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Political environment and attraction of foreign direct investment: an institutionalist approach

Author

Listed:
  • Eduardo Henrique de Borba

    (Santa Catarina State University (UDESC))

  • Ana Paula Menezes Pereira

    (Santa Catarina State University (UDESC))

Abstract

The study examines the relationship between the quality of the institutional arrangements of political environment and the attraction of foreign direct investment (FDI). Panel models were estimated for 123 countries from 2011 to 2016, where the dependent variable was the FDI net inflows, explained by two institutional variables related to the political dimension. Due to the strong correlation between the institutional variables, they were evaluated in separate models, in addition to versions with and without the use of instruments. The results suggest that the quality of the institutional arrangements of the political environment is essential to attract FDI.

Suggested Citation

  • Eduardo Henrique de Borba & Ana Paula Menezes Pereira, 2020. "Political environment and attraction of foreign direct investment: an institutionalist approach," Economics Bulletin, AccessEcon, vol. 40(1), pages 837-845.
    • Handle: RePEc:ebl:ecbull:eb-19-00732
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    References listed on IDEAS

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    More about this item

    Keywords

    Institutions; Political environment; Politics; Foreign direct investment; FDI; Instrumental variables;
    All these keywords.

    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics

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