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Does Governance Facilitate Foreign Direct Investment in Developing Countries?

Author

Listed:
  • Md. Shakib Hossain

    (Senior Lecturer, Department of Business Administration, East West University, Bangladesh,)

  • Md. Ziaur Rahman

    (Senior Officer, Prime Bank Ltd, Bangladesh.)

Abstract

Using panel data analysis, it is an attempt to estimates the significance of governance on foreign direct investment (FDI) for a sample of 80 developing countries from 1998 to 2014. For exploring the relationship, the paper has used the Kaufman et al. (2003) interpretation concerning the governance. Generalized least square (GLS), feasible GLS (FGLS), pooled ordinary least squares (OLS), random effect, fixed effect, poisson regression, praiswinsten, generalized method of movement and generalized estimating equation method are utilizing for estimates the importance of governance for facilitating FDI. According to the OLS method, for the governance variables the coefficient implies that a one standard deviation improvement in voice and accountability, political stability and absence of violence, government effectiveness, regulatory qualities, rules of law and control of corruption increases FDI by 29.4%, 29.2%, 28.6%, 20.5%, 23.1% and 23.6% respectively.

Suggested Citation

  • Md. Shakib Hossain & Md. Ziaur Rahman, 2017. "Does Governance Facilitate Foreign Direct Investment in Developing Countries?," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 164-177.
    • Handle: RePEc:eco:journ1:2017-01-23
    as

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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Governance; Foreign Direct Investment; Generalized Least Square; Generalized Estimating Equation;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis

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