Open AccessThe Effect of Economic Institutions on Foreign Direct Investment:
Author(s) -
Qurat ul Ain,
Tahir Yousaf,
Yasmin Akhtar
Publication year - 2018
Publication title -
asia proceedings of social sciences
Language(s) - English
Resource type - Journals
eISSN - 2663-6638
pISSN - 2663-662X
DOI - 10.31580/apss.v2i2.263
Subject(s) - foreign direct investment , openness to experience , panel data , economics , human capital , per capita , hausman test , latin americans , international economics , fixed effects model , market size , investment (military) , monetary economics , macroeconomics , economic growth , econometrics , psychology , social psychology , population , linguistics , philosophy , demography , sociology , politics , political science , law
This study focuses on examining the effect of Economic Institutions on Foreign Direct Investment (FDI) inflows in 24 developing Latin American and Caribbean (LAC) countries. This study used panel data over the period 1995 to 2015 , for its emerical investigation, by using a fixed-effects model as suggested by Hausman after controlling for heteroscedasticity. The empirical finding suggests that the counties can attract more FDI if they enhance their economic institutions despite deficiencies in market size, trade openness and high level of human capital. However the development level seems to have an equal importance as that of economic institutions and is significant at all levels in LAC. The study also shows significant relation with controlling variables namely GDP per Capita and human capital.