The Inverse Relationship Between the Informal Economy and FDI Inflows in CIS Countries

• 영문명: The Inverse Relationship Between the Informal Economy and FDI Inflows in CIS Countries
• 발행기관: 한국무역연구원
• 저자명: 김다흰(Da-Hin Kim) 강문성(Moon-Sung Kang)
• 간행물 정보: 『무역연구』제18권 제5호, 115~135쪽, 전체 21쪽
• 주제분류: 경제경영 > 무역학
• 파일형태: PDF
• 발행일자: 2022.10.31

영문 초록

Purpose - This research investigates the impact of the informal economy on foreign direct investment (FDI) inflows. This work is the first study that has examined this issue in the case of Commonwealth of Independent States (CIS) countries. Design/Methodology/Approach - We use a fixed-effects regression model with a panel dataset of eight CIS countries spanning 14 years (2002~2015) to shed light on the role of the informal economy in CIS countries as one of the determinants of FDI. Findings - The results show that as the size of the informal economy increases, FDI inflows decrease, suggesting a new perspective on the informal economy’s impact on FDI, with the empirical evidence revealing a negative relationship between them in CIS countries. Based on the empirical results, it is evident that human capital, extrapolated from secondary school enrollment numbers, and openness to trade are the key components in attracting FDI to CIS countries. Research Implications - It is clear that the informal economy is a hindrance to attracting FDI, implying that potential foreign investors have concerns about the informal economic system because where their properties cannot be protected in a formal legal system. These results suggest that the governments of CIS countries should reduce the size of their informal economy to create an FDI-friendly environment.

목차

Ⅰ. Introduction

Ⅱ. Theoretical Background and Hypotheses Development

Ⅲ. Brief Overview of CIS Countries

Ⅳ. Research Method

Ⅴ. Empirical Results and Discussion

Ⅵ. Implications and Conclusion

References

키워드

Commonwealth of Independent States (CIS) Foreign Direct Investment Informal Economy Transition Economy