 Economic freedom and bilateral direct investmentTao Xu Economic Modelling, 2019, vol. 78, issue C, 172-179 Abstract: Economic freedom (freedom from the intervention of government) is essential for doing business, so economic freedom of both the home country and the host country are important for bilateral foreign direct investment. However, though some literature has investigated the role of host country's economic freedom in bilateral direct investment, no literature has studied the role of home country's economic freedom. This paper has studied this issue in a gravity model with a sample of 155 countries. This paper has also employed some effective estimation techniques of gravity model to incorporate the zero observations and adopted quantile regression method. The findings indicate that economic freedom of both the home country and the host country are positively correlated with bilateral direct investment, and the economic freedom of home country has even stronger explanatory power for foreign direct investment. Hence, promoting the economic freedom may encourage more outward foreign direct investment than inward direct investment. Keywords: Foreign direct investment; Economic freedom; Gravity equation; Home country; Host country (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:78:y:2019:i:c:p:172-179 DOI: 10.1016/j.econmod.2018.09.017 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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