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The Formal and Informal Framework of Foreign Direct Investment

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  • Pierre-Guillaume Méon

    (Université Libre de Bruxelles)

  • Khalid Sekkat

    (University of Brussels)

Abstract

This paper studies the impact of social trust and formal legal and institutional determinants of foreign direct investment inflows and investment in a panel of countries. It reports that formal determinants and trust interact, and that the two are substitutes. Namely, the marginal impact of formal measures decreases with trust and vice versa.

Suggested Citation

  • Pierre-Guillaume Méon & Khalid Sekkat, 2013. "The Formal and Informal Framework of Foreign Direct Investment," Working Papers 810, Economic Research Forum, revised Dec 2013.
    • Handle: RePEc:erg:wpaper:810
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