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Openness, Investment Climate, and FDI in Developing Countries
Author(s) -
Sekkat Khalid,
VeganzonesVaroudakis MarieAnge
Publication year - 2007
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/j.1467-9361.2007.00426.x
Subject(s) - openness to experience , foreign direct investment , attractiveness , developing country , international economics , economics , order (exchange) , investment (military) , politics , international trade , development economics , macroeconomics , economic growth , political science , psychology , social psychology , finance , psychoanalysis , law
The paper assesses the importance of openness, infrastructure availability, and sound economic and political conditions in increasing developing countries' attractiveness with respect to FDI. The results show that these factors are particularly important for South Asia, Africa, and the Middle East. The paper also shows a higher impact of these factors on FDI in the manufacturing sector than on total FDI. The message to developing countries' policymakers is twofold. First, efforts towards openness should be initiated or further increased in order to make their economies attractive to foreign investors. Second, improvements in other aspects of the investment climate are important complements to openness and result in additional and sensitive increases in FDI inflows.