Institutions, macroeconomic policy and foreign direct investment: South Asian countries case

Muhammad Azam, Hashim Khan, Ahmed Hunjra (), H. Mushtaq Ahmad and Muhammad Chani

MPRA Paper from University Library of Munich, Germany

Abstract: Recent economic literature suggests that institutional quality factors exerted positive effect on foreign direct investment (FDI) inflows. The main focus of this study is to examine the role of institutional factors and macro economic policy factors on FDI inflows in a panel data of seven South Asian countries over the period of 12 years since 1996-2007. This study implies that a good institutional quality plays a key role in attractiveness of FDI inflows. A poor macroeconomic policy situation produces negative impact on FDI. Good Institutional quality and macroeconomic policy generate negative in a combined form on FDI. This study further implies that poor economic policy deteriorates institutional quality and creates negative effect on FDI inflows. Incredibility in trade liberalization policy may be a part of poor macro economic policy.

Keywords: Institutional quality; Macro economic policy; Attractiveness; Incredibility; South Asia (search for similar items in EconPapers)
JEL-codes: E02 E60 (search for similar items in EconPapers)
Date: 2011-01-01
New Economics Papers: this item is included in nep-dev and nep-mac
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:32480

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