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Institutional Similarity and Bilateral FDI

Author

Listed:
  • Makram El-Shagi

    (Henan University)

  • Bashir Muhammad

    (Henan University)

Abstract

In this paper, we assess the effect of institutional similarity on foreign direct investment. In a large panel of bilateral FDI stocks that covers roughly 190 countries both as host and source countries of FDI, we demonstrate that it is not similar in general, but similar with respect to government involvement in markets and with respect to corruption that matters. Our finding is robust to a large set of different panel estimators and specifications of the gravity model that is underlying our estimation.

Suggested Citation

  • Makram El-Shagi & Bashir Muhammad, 2024. "Institutional Similarity and Bilateral FDI," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 4605-4638, March.
    • Handle: RePEc:spr:jknowl:v:15:y:2024:i:1:d:10.1007_s13132-023-01312-x
    DOI: 10.1007/s13132-023-01312-x
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    More about this item

    Keywords

    FDI; Institutions; Similarity; Gravity model;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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