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Analyzing the Impact of Governance, Environment and Trade on Inward FDI: A Case of Cambodia, Thailand and Vietnam from ASEAN

Author

Listed:
  • Farrukh Nawaz Kayani

    (Faculty of Business Studies, Arab Open University (AOU), Riyadh, Saudi Arabia,)

  • Ismat Nasim

    (Department of Economics, Government Sadiq College Women University, Bahawalpur, Pakistan,)

  • Khalil Abu Saleem

    (Faculty of Business Studies, Arab Open University, Riyadh, Saudi Arabia.)

Abstract

The purpose of the study is to analyze the empirical link between governance, environmental quality, and trade as it relates to foreign direct investment in Cambodia, Thailand, and Vietnam for the period ranging from 1996 to 2022. Mixed order of integration (0 and 1) was discovered after applying four panel unit tests (IPS-W stat, ADF-Fisher, PP-Fisher, and LLC t). The Kao Residual Co-integration test was carried out to determine whether there was co-integration among the variables of the study. The results of the test demonstrated that some variables are, in fact, co-integrated during the investigation. The findings of unit root tests reveal the use of Panel ARDL, and the results demonstrate that governance has a positive overall effect on FDI. This is because tightening the control of corruption, improving regulatory quality, and strengthening the rule of law are all contributing to an increase in FDI in Cambodia, Thailand, and Vietnam. The study concluded that there is a link between a negative opinion of the efficacy of the government and foreign direct investment; however, this association did not reach the level of statistical significance required to be considered significant. To encourage FDI, trade also provides access to natural resources as the free flow of raw materials and intermediate goods is being supported by the initiatives connected to the promotion of FDI, which is made possible through trade.

Suggested Citation

  • Farrukh Nawaz Kayani & Ismat Nasim & Khalil Abu Saleem, 2024. "Analyzing the Impact of Governance, Environment and Trade on Inward FDI: A Case of Cambodia, Thailand and Vietnam from ASEAN," International Journal of Energy Economics and Policy, Econjournals, vol. 14(2), pages 523-534, March.
    • Handle: RePEc:eco:journ2:2024-02-53
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Control of Corruption; Environmental Quality; Government Effectiveness; Rule of Law; Trade Openness; Foreign Direct Investment;
    All these keywords.

    JEL classification:

    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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