IDEAS home Printed from https://ideas.repec.org/p/ahy/wpaper/wp27.html
   My bibliography  Save this paper

Inward FDI and the quality of domestic institutions: a crosscountry panel VAR analysis

Author

Listed:
  • Roberto Antonietti

    (University of Padova)

  • Jasmine Mondolo

    (Università Politecnica delle Marche)

Abstract

Domestic institutions are recognized as important factors in attracting foreign direct investment (FDI) and spurring economic development in host countries, but FDI may also affect and shape domestic institutions. In this paper we use extensive data on the quality of institutions and on inward FDI in 102 countries over a period of 22 years to see whether, and to what extent, multinational corporations influence the quality of institutions in the host economies. We distinguish between different types of institution, FDI and country, and adopt a panel VAR approach to detect the direction of causality. Our findings suggest that higher amounts of inward FDI, especially in the form of greenfield projects, has a short-term significant impact on the local institutional environment. In particular, FDI has a beneficial effect on an array of institutional dimensions in both transition and developing economies.

Suggested Citation

  • Roberto Antonietti & Jasmine Mondolo, 2022. "Inward FDI and the quality of domestic institutions: a crosscountry panel VAR analysis," Discussion Paper series in Regional Science & Economic Geography 2022-01, Gran Sasso Science Institute, Social Sciences, revised Sep 2024.
    • Handle: RePEc:ahy:wpaper:wp27
    as

    Download full text from publisher

    File URL: https://www.gssi.it/images/discussion%20papers%20rseg/DPRSEG_2022-01.pdf
    File Function: First version, 2020
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    institutional quality; foreign direct investment; transition economy; developing economy;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ahy:wpaper:wp27. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Andrea Ascani (email available below). General contact details of provider: https://edirc.repec.org/data/ssgssit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.