Groznykh, R. I., & Mariev, O. S. (2019). Impact of Institutional Factors on Foreign Direct Investment Inflows: Cross- country Analysis. Zhurnal Economicheskoj Teorii [Russian Journal of Economic Theory], 16(2), 305-311
The research is devoted to the analysis of various institutional factors as determinants of foreign direct investment (FDI) inflows to different countries. The objective of the research is to estimate the effect of institutions on FDI inflows for developed and developing countries. The analysis involves a database of cross-country FDI inflows of 62 countries-importers of FDI and 112 countries-exporters over the 2001 to 2017 period. The paper supposes that the impact of institutional factors might be different for the groups of developed and developing countries: since developed economies have high institutional indicators, they tend to attract larger amounts of foreign direct investment. The estimation is based on the gravity approach. The main method used for the econometric estimation is Pseudo Poisson Maximum Likelihood (PPML) regression. Thus, institutions in developed countries have a positive and significant impact on FDI attraction. At the same time, the analysis of developing countries has shown that some institutions have less significant influence on the FDI inflows. Based on the results of our research, the recommendations for government policy on institutional improvement can be suggested.
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