Economics at your fingertips  

Home Country Institutions and Outward FDI: An Exploratory Analysis in Emerging Economies

Ricardo E. Buitrago R. and Maria Barbosa Camargo
Additional contact information
Ricardo E. Buitrago R.: Facultad de Ciencias Naturales e Ingeniería, Universidad Jorge Tadeo Lozano, Bogotá 11001, Colombia

Authors registered in the RePEc Author Service: Ricardo E. Buitrago R.

Sustainability, 2020, vol. 12, issue 23, 1-20

Abstract: Although the internationalization of economies is driven by specific industry conditions or business-specific differences, the institutions that exist as background conditions directly determine firms’ strategies and interactions in the international environment. This paper contributes to the discussion on the relationship between institutional quality and outward FDI (OFDI). We used 30 indicators in 48 emerging economies in the period 2007–2017; we collected the indicators from alternative secondary sources. After we applied Factor Analysis, six factors were retained. We named the components as follows: “Transparency of government” (F1), “Research, development and innovation, R&D+I” (F2), “Inequality” (F3), “Rules on inward FDI (IFDI)” (F4), “Education and training” (F5), and “Financial market” (F6). The panel data model outcomes suggest that Factor 2, Research, development and innovation, has a significant and positive effect on OFDI. Factor 6, the Financial market, has a significant and negative effect on OFDI. When we include lagged values of OFDI stocks the results also show that the government measures transparency positively and significantly affects OFDI stocks. These findings imply that the institutional environment creates two streams of OFDI: leverage and escapism.

Keywords: institutional quality; outward FDI; factor analysis; panel data; emerging and developing economies (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

Downloads: (external link) (application/pdf) (text/html)

Related works:
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:

Access Statistics for this article

Sustainability is currently edited by Ms. Elaine Li

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().

Page updated 2023-09-20
Handle: RePEc:gam:jsusta:v:12:y:2020:i:23:p:10010-:d:454089