Foreign direct investment, institutional quality, economic freedom and entrepreneurship in emerging markets

Hernan Herrera-Echeverri (), Jerry Haar and Juan Benavides Estévez-Bretón

Journal of Business Research, 2014, vol. 67, issue 9, 1921-1932

Abstract: This study investigates the relationship between foreign direct investment, institutional quality, economic freedom, and entrepreneurship in emerging markets. The research compares the capacity and appetite for business creation among high-income, low-income and emerging countries. The results are based on a panel study of data, from 2004 to 2009 for 87 countries, using as its source “The World Bank Entrepreneurship Snapshots” to look at the connection between business creation, institutional quality, market freedom and foreign direct investment (FDI). The findings reveal a strong positive relationship between institutional quality and business generation in all three of the above categories. The freedom to create businesses and invest has an impact on business generation in emerging countries, while the influence of international trade appears more important as a spur to the genesis of business in low-income countries. Finally, there is a direct and significant relationship between FDI and business development in emerging countries. This result is consistent with “the spillover theory of entrepreneurship” (Acs et al., 2009; Ayyagari and Kosová, 2010; Görg and Strobl, 2002).

Keywords: Business development; Entrepreneurship; FDI; World Bank (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (62)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0148296313003901
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Foreign Direct Investment, Institutional Quality, Economic Freedom and Entrepreneurship in Emerging Markets (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:67:y:2014:i:9:p:1921-1932

DOI: 10.1016/j.jbusres.2013.11.020

Access Statistics for this article

Journal of Business Research is currently edited by A. G. Woodside

More articles in Journal of Business Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().