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Administrative costs of regulation and foreign direct investment: the Standard Cost Model in non-OECD countries

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  • Jacopo Torriti
  • Eka Ikpe

Abstract

In recent years both developed and developing countries have experienced an increasing number of government initiatives dedicated to reducing the administrative costs (AC) imposed on businesses by regulation. We use a bi-linear fixed-effects model to analyze the extent to which government initiatives to reduce AC through the Standard Cost Model (SCM) attract foreign direct investment (FDI) among 32 developing countries. Controlling for standard determinants of the SCM, we find that the SCM in most cases leads to higher FDI and that the benefits are more significant where the SCM has been implemented for a longer period. Copyright Kiel Institute 2015

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  • Jacopo Torriti & Eka Ikpe, 2015. "Administrative costs of regulation and foreign direct investment: the Standard Cost Model in non-OECD countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(1), pages 127-144, February.
    • Handle: RePEc:spr:weltar:v:151:y:2015:i:1:p:127-144
    DOI: 10.1007/s10290-014-0200-y
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    More about this item

    Keywords

    Administrative costs; Foreign direct investment; Developing countries; Standard Cost Model; F43; H83;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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