Foreign direct investment and institutional reform: evidence and an application to Portugal

Paulo Júlio and Ricardo Pinheiro-Alves
Authors registered in the RePEc Author Service: Jose Tavares ()

Working Papers from Banco de Portugal, Economics and Research Department

Abstract: We examine the role of geographic, economic, and institutional factors in attracting Foreign Direct Investment (FDI) in Europe, using a cross-section of inward bilateral investments. We estimate and assess the expected benefits, the required reform efforts, and the efficiency of reform options corresponding to a convergence of Portuguese institutions to EU standards. We conclude that improving home institutions is likely to have a quantitatively very significant role in attracting FDI. Geographical and market size factors also play a role. Reforms promoting the independence of financial institutions and a leaner bureaucracy, lowering political risk and corruption, and improving the investment code may significantly affect the amount of bilateral inward FDI that is targeted to Portugal.

JEL-codes: F30 H00 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-cse and nep-eur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Journal Article: Foreign direct investment and institutional reform: evidence and an application to Portugal (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ptu:wpaper:w201306

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