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Economic reforms as a tool to attract foreign direct investment: is it a chimera?

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  • Sumon Kumar Bhaumik
  • Ralitza Dimova

Abstract

The policy implication of the existing literature on foreign direct investment (FDI) inflows is that countries that require FDI can attract it by adopting policy measures that facilitate the emergence of appropriate regulatory and institutional environment, greater integration with the global economy and the development of resources like human capital. We test the plausible hypothesis that, on the contrary, FDI flows are largely path dependent, and our empirical exercise finds prima facie support in favour of this hypothesis. This has obvious implications for FDI flows to poor countries.

Suggested Citation

  • Sumon Kumar Bhaumik & Ralitza Dimova, 2009. "Economic reforms as a tool to attract foreign direct investment: is it a chimera?," Applied Economics Letters, Taylor & Francis Journals, vol. 16(9), pages 951-957.
    • Handle: RePEc:taf:apeclt:v:16:y:2009:i:9:p:951-957
    DOI: 10.1080/13504850701222087
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