Foreign Direct Investment in oil-abundant countries: The role of institutions

Federico Carril-Caccia, Juliette Milgram-Baleix and Jordi Paniagua ()
Authors registered in the RePEc Author Service: Juliette Milgram

PLOS ONE, 2019, vol. 14, issue 4, 1-23

Abstract: The present work reassesses the impact of good governance and democracy on Foreign Direct Investment (FDI) in oil-abundant countries. To this end, we estimate the effect of host countries’ institutions on greenfield FDI, using a gravity equation for a dataset that covers 182 countries during 2003-2012. Our findings confirm that compliance to rule of law, lack of corruption, political stability and democracy could boost new FDI links through the extensive margin. Our results could not rule out the “oil curse”, meaning that oil producers attract fewer new greenfield projects than similar countries without oil. Unlike other studies, we show that the impact of institutions is not necessarily undermined by the presence of natural resources.

Date: 2019
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:plo:pone00:0215650

DOI: 10.1371/journal.pone.0215650

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