Institutional Similarity and Bilateral FDI

Makram El-Shagi and Bashir Muhammad
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Bashir Muhammad: Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan

No 2019/2, CFDS Discussion Paper Series from Center for Financial Development and Stability at Henan University, Kaifeng, Henan, China

Abstract: In this paper we assess the effect of institutional similarity on foreign direct investment. In a large panel of bilateral FDI stocks that covers roughly 190 countries both as host and source country of FDI we demonstrate that it is not similarity in general, but similarity with respect to government involvement in markets and with respect to corruption that matters. Our finding is robust to a large set of different panel estimators and specifications of the gravity model that is underlying our estimation.

Keywords: FDI; institutions; similarity; gravity model (search for similar items in EconPapers)
JEL-codes: D73 E02 F21 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2019-02
New Economics Papers: this item is included in nep-int and nep-mac
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http://cfds.henuecon.education/images/dpaper/WP_2_2019_FDI.pdf First version, 2019 (application/pdf)

Related works:
Journal Article: Institutional Similarity and Bilateral FDI (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:fds:dpaper:201902

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