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Impact of Human Development Index and Rule of Law to Attract Foreign Direct Investment in Selected Developing Countries

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  • mollaesmaeili dehshiri, hassan
  • sameti, Morteza
  • sameti, Majid

Abstract

Capital is the driving force of economic growth and development and the optimal utilizations of resources and capital are the most important factors in achieving economic growth and development. Foreign direct investment is one of the best methods in industrial projects’ financing and investing. Therefore, in line with the economic growth and development it is necessary to identify those factors which affect the FDI and to determine the influence degree of each to make a proper policy in this area. Human development index and rule of law are the effective factors which influence the absorption of FDI and this varies according to different economic governments. The main purpose of this paper is to investigate effects of human development index and rule of law on attracting FDI. In order to assess each of these factors’ influence, we consider the FDI as a function of GPD, exchange rate, inflation, human development index and rule of law, the data is collected in 23 developing countries between 2001-2010 and a model is provided by using regression of panel data. The results of model estimation confirm the study hypothesis which is on the basis of positive and significant impacts of human development index and rule of law on the attraction of FDI.

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  • mollaesmaeili dehshiri, hassan & sameti, Morteza & sameti, Majid, 2012. "Impact of Human Development Index and Rule of Law to Attract Foreign Direct Investment in Selected Developing Countries," MPRA Paper 81479, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:81479
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    References listed on IDEAS

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    1. Francisco J. Arcelus & Kanhaiya Lal Sharma & Gopalan Srinivasan, 2005. "The Human Development Index Adjusted for Efficient Resource Utilization," WIDER Working Paper Series RP2005-08, World Institute for Development Economic Research (UNU-WIDER).
    2. Walid Hejazi & A Edward Safarian, 1999. "Trade, Foreign Direct Investment, and R&D Spillovers," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(3), pages 491-511, September.
    3. Jensen, Nathan M., 2003. "Democratic Governance and Multinational Corporations: Political Regimes and Inflows of Foreign Direct Investment," International Organization, Cambridge University Press, vol. 57(3), pages 587-616, July.
    4. Imad A. Moosa, 2002. "Foreign Direct Investment," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-4039-0749-3, March.
    5. Estrin, Saul & Bevan, Alan, 2000. "The Determinants of Foreign Direct Investment in Transition Economies," CEPR Discussion Papers 2638, C.E.P.R. Discussion Papers.
    6. Bevan, Alan A. & Estrin, Saul, 2004. "The determinants of foreign direct investment into European transition economies," Journal of Comparative Economics, Elsevier, vol. 32(4), pages 775-787, December.
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    Cited by:

    1. Mohammad Anhier Al-Froukh, 2021. "Developing in Investment Environment in Jordan from the Perspective of Jordan Investments Commission," International Journal of Business and Management, Canadian Center of Science and Education, vol. 14(10), pages 116-116, July.

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    More about this item

    Keywords

    Foreign direct investment; human development index; rule of law; panel data Regression;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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