The Impact of Institutional Quality on FDI Inflows: The Evidence from Capital Outflow of Asian Economies

• 발행기관: 한국유통과학회
• 저자명: Anh Hoang LE Taegi KIM
• 간행물 정보: 『The Journal of Asian Finance, Economics and Business(JAFEB)』Vol. 8 No.8, 335~343쪽, 전체 9쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2021.08.30

영문 초록

This paper investigates the effect of institutional quality on FDI inflows by using FDI outflows from Asian countries from 2009 to 2017. We used the FDI data from five major Asian economies, which are South Korea, China, Japan, Singapore, and Hong Kong. The gravity model was used to examine the effect of institutional quality on FDI flows. The regression model considers several independent variables, and we select the most appropriate variables by using the Bayesian Model Averaging (BMA) estimator. We have shown that foreign direct investment from Asian countries depends on the size of home and the partner countries, geographical distance, trade interaction between two countries, economic freedom, labor supply, tariff rate, and capacity of the government. The results of different estimation techniques emphasize that multinational enterprises prefer to invest in those countries which have a higher income, which shows the evidence for Lucas’s paradox. The results also show that economic freedom and control of corruption have a positive impact on FDI inwards. The regression results show that better institutional quality in host countries encourages more FDIs from Asian economies. It suggests that the state should control corruption and create a free economic environment to attract FDIs.

목차

1. Introduction

2. Literature Review

3. Data and Methodology

4. Results and Discussions

5. Conclusion

키워드

Foreign Direct Investment Institutional Quality Asian Economies Gravity Model Bayesian Model Averaging