FDI in ASEAN-8: Does institutional quality matter?

Masron, Tajul Ariffin; Nor, Eliza

doi:10.1080/13504851.2012.687090

Cited by 41 publications

(40 citation statements)

References 4 publications

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“…While a voluminous empirical study examines the relationship between institutional quality and economic growth, and FDI inflow and economic growth, however, the literature related to the nexus between FDI inflow and institutional quality is scanty. To the best of our knowledge, there are few studies that directly examine the relationship between FDI inflow and institutional quality (Jude and Levieuge, 2015;Buchana et al, 2012;Masron et al, 2013;Shah et al, 2016;Jindřichovská et al, 2020;Arifin, 2017;. Jude and Levieuge (2015) theoretically demonstrate that institutional quality affects FDI inflow through knowledge spillover.…”

Section: Introductionmentioning

confidence: 99%

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Institutional Quality and Foreign Direct Investment Inflows: Evidence from Cross-country Data with Policy Implication

Behera¹,

Bikash²,

Biswashree³

et al. 2020

IJEBA

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Purpose: The study examines the impact of institutional quality on Foreign Direct Investment (FDI) inflows for emerging economies from South Asiain the period 2002-2016. Other economic factors such as globalisation, financial development, and GDP are also considered. Design/Methodology/Approach: The study uses Im-Pesaran-Shin (IPS) panel unit root test to check stationarity property. It uses cross dependency (CD) and cross-sectional augments IPS tests to check cross-sectional dependency and heterogeneity across the group countries. Next, it uses panel ARDL-PMG tests to check the existence of long-relationship among variables. Then, we apply the panel Granger causality test to check the direction of causality. Finally, for the robustness of results, we use the Pedroni co-integration technique. Findings: The study finds the existence of a long-run relationship between institutional quality and FDI inflows. Other economic factors such as globalization and financial development show long-run and strong causality with FDI inflows. However, the short-run unidirectional causality from institutional quality to FDI inflows is not found for all the countries. Finally, institutional quality strongly causes FDI inflows provided paired with either globalisation or financial development. Practical Implications: Institutional quality increases the FDI inflows. Therefore, policymakers should focus on institutional quality along with globalization and financial development for higher inflows of FDI in emerging countries. Originality/Value: The study considers institutional quality as one of the inputs for FDI inflows in selected emerging economies from South Asia. Further, it creates an institutional quality index for the emerging countries to examine the impact on FDI inflows.

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Section: Introductionmentioning

confidence: 99%

“…Further, they provide evidence that institutional quality has a positive and significant effect on FDI inflow. Masron et al (2013) study the effect of institutional quality on FDI inflow in ASEAN-8. They find that institutional quality is an additional factor which attracts the FDI apart from cheaper labor cost.…”

Section: Introductionmentioning

confidence: 99%

Institutional Quality and Foreign Direct Investment Inflows: Evidence from Cross-country Data with Policy Implication

Behera¹,

Bikash²,

Biswashree³

et al. 2020

IJEBA

View full text Add to dashboard Cite

show abstract

“…The positive role of institutional quality on economic development has been generally supported by numerous studies (Asiedu & Lien, 2011;Bénassy-Quéré, Coupet, & Mayer, 2007;Buchanan, Le, & Rishi, 2012;Cole, Elliott, & Zhang, 2009;Daniele & Marani, 2011;Globerman & Shapiro, 2002;Goswami & Haider, 2014;Hyun, 2006;Masron & Nor, 2013). Some studies (see Eichengreen & Tong, 2007;Liu, Chow, & Li, 2007;Ravenhill, 2006;Wang, Wei, & Liu, 2007;Yang, 2006) have suggested that because large countries have a larger market size -e.g., China's market is almost double that of the Association of Southeast Asian nations (ASEAN) markets combined -small improvements in institutional quality in small countries may be insufficient to offset the attractiveness of large countries.…”

Section: Introductionmentioning

confidence: 94%

Institutional Quality in Attracting Foreign Direct Investment to Small Countries

Masron

Naseem

Wahab

2018

MJES

Self Cite

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Institutional quality (IQ) has been proven by many studies as generating positive impact to economic development, including via luring more foreign direct investment (FDI) inflows. However, the inconsistent reality relating to FDI inflows and IQ of the host countries, especially in small countries has led this study to reexamine the effectiveness of IQ in promoting FDI inflows. Hence, selecting small countries in four regions located around four large countries, namely Brazil, Russia, India and China (BRIC) as a case study, results confirmed that the effectiveness of IQ is gradually eroded if IQ in BRIC is also relatively improved.

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“…They reported that government failure, political risk, public infrastructure and attitude of the domestic country towards the host country were responsible for lower FDI. Masron and Nor (2013) establish that the economy of the host country has some bearing on the attraction of FDI inflows. Absorptive capacity factors like country's business ease of business, certainty, host-country public infrastructure, credible financial institutions, and integrity of host-country institutions help to attract FDI (Bachmann et al, 2013;Mathur and Singh, 2013).…”

Section: Literature Reviewmentioning

confidence: 99%

Foreign Direct Investment in Zimbabwe: The Role of Uncertainty, Exports, Cost of Capital, Corruption and Market Size

Muzurura

2019

The Economics and Finance Letters

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Most of developing countries such as Zimbabwe see foreign direct investment as a panacea for augmenting domestic savings, generating employment, eradicating poverty and stimulating economic growth. Foreign direct investment also is associated with significant positive spillover benefits such as; facilitating technological progress, enhancing production efficiencies, promoting skills and knowledge diffusion and increasing international competitiveness. The paper investigated the role of cost of capital, uncertainty, exports, market size and other macro factors in attracting FDI in Zimbabwe. This paper relied on a time series analysis using Ordinary Least Regression equation for the period 1998-2017. Uncertainty and cost of capital were found to be negative and statistically significant whilst market size and lagged exports were found to be positive and statistically significant. The paper recommends adoption of policies that improve domestic absorptive capacity such as the elimination of uncertainties in the economy, promoting more trade openness, improving market size and liberalisation of credit and financial markets to reduce firm borrowing costs. Contribution/Originality: This study contributes to the existing literature on foreign direct investment by demonstrating the role of macro-uncertainty and cost of capital in attracting FDI. In addition, this study utilizes a new estimation methodology of FDI that is based on the modification of the flexible accelerator model of investment behaviour.

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FDI in ASEAN-8: Does institutional quality matter?

Cited by 41 publications

References 4 publications

Institutional Quality and Foreign Direct Investment Inflows: Evidence from Cross-country Data with Policy Implication

Institutional Quality and Foreign Direct Investment Inflows: Evidence from Cross-country Data with Policy Implication

Institutional Quality in Attracting Foreign Direct Investment to Small Countries

Foreign Direct Investment in Zimbabwe: The Role of Uncertainty, Exports, Cost of Capital, Corruption and Market Size

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