Does Governance Facilitate Foreign Direct Investment in Developing Countries?

Md. Shakib Hossain and Md. Ziaur Rahman
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Md. Shakib Hossain: Senior Lecturer, Department of Business Administration, East West University, Bangladesh,
Md. Ziaur Rahman: Senior Officer, Prime Bank Ltd, Bangladesh.

International Journal of Economics and Financial Issues, 2017, vol. 7, issue 1, 164-177

Abstract: Using panel data analysis, it is an attempt to estimates the significance of governance on foreign direct investment (FDI) for a sample of 80 developing countries from 1998 to 2014. For exploring the relationship, the paper has used the Kaufman et al. (2003) interpretation concerning the governance. Generalized least square (GLS), feasible GLS (FGLS), pooled ordinary least squares (OLS), random effect, fixed effect, poisson regression, praiswinsten, generalized method of movement and generalized estimating equation method are utilizing for estimates the importance of governance for facilitating FDI. According to the OLS method, for the governance variables the coefficient implies that a one standard deviation improvement in voice and accountability, political stability and absence of violence, government effectiveness, regulatory qualities, rules of law and control of corruption increases FDI by 29.4%, 29.2%, 28.6%, 20.5%, 23.1% and 23.6% respectively.

Keywords: Governance; Foreign Direct Investment; Generalized Least Square; Generalized Estimating Equation (search for similar items in EconPapers)
JEL-codes: C55 E22 G34 (search for similar items in EconPapers)
Date: 2017
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