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Innovative Solutions for Economic Growth: Exploring the Impact of Economic Freedoms on Foreign Direct Investment Attraction

Author

Listed:
  • Štilić Anđelka

    (Academy of Applied Studies Belgrade, The College of Tourism, Belgrade, Serbia)

  • Mastilo Andrea

    (Student of Economics at Royal Russell London, London, United Kingdom)

  • Vuković Krsto

    (Economics and Finance, Queen Mary University of London, London, United Kingdom)

  • Mastilo Dejan

    (Oikos Institute Research Center Bijeljina, Bijeljina, Bosnia and Herzegovina)

Abstract

Economic freedoms are essential for the growth and development of countries, but their distribution varies across nations, resulting in differences in economic growth. This study aims to explore the impact of economic freedoms on economic growth, measured by gross domestic product (GDP) per capita and foreign direct investment (FDI) inflow, by examining the influence of institutional quality. Economic freedom indicators were obtained from the 2022 report by the Heritage Foundation, and GDP per capita and FDI indicators were sourced from the World Bank report. This study employs multivariate regression analysis to investigate the relationship between economic freedoms and economic growth. The findings suggest that economic freedoms have a positive effect on both GDP per capita growth and FDI inflow. Government integrity was found to be the primary indicator for GDP per capita growth, while Business freedom was identified as the key factor in attracting FDI. The implications of these results are significant, as they can inform policy decisions aimed at improving the standard of living by increasing GDP per capita and creating employment opportunities through FDI.

Suggested Citation

  • Štilić Anđelka & Mastilo Andrea & Vuković Krsto & Mastilo Dejan, 2023. "Innovative Solutions for Economic Growth: Exploring the Impact of Economic Freedoms on Foreign Direct Investment Attraction," Economics, Sciendo, vol. 11(1), pages 29-44, June.
    • Handle: RePEc:vrs:econom:v:11:y:2023:i:1:p:29-44:n:10
    DOI: 10.2478/eoik-2023-0013
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    References listed on IDEAS

    as
    1. Hafiz Hoque & Heng Liu, 2023. "Impact of bank regulation on risk of Islamic and conventional banks," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 1025-1062, January.
    2. Tag, Mehmet Nasih & Degirmen, Suleyman, 2022. "Economic freedom and foreign direct investment: Are they related?," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 737-752.
    3. Christian Haddad & Lars Hornuf, 2019. "The emergence of the global fintech market: economic and technological determinants," Small Business Economics, Springer, vol. 53(1), pages 81-105, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    economic freedoms; gross domestic product; GDP per capita; foreign direct investments; growth; employment;
    All these keywords.

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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