Institutional Similarity and Bilateral FDI

Makram El-Shagi and Bashir Muhammad ()
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Bashir Muhammad: Henan University

Journal of the Knowledge Economy, 2024, vol. 15, issue 1, No 182, 4605-4638

Abstract: Abstract In this paper, we assess the effect of institutional similarity on foreign direct investment. In a large panel of bilateral FDI stocks that covers roughly 190 countries both as host and source countries of FDI, we demonstrate that it is not similar in general, but similar with respect to government involvement in markets and with respect to corruption that matters. Our finding is robust to a large set of different panel estimators and specifications of the gravity model that is underlying our estimation.

Keywords: FDI; Institutions; Similarity; Gravity model (search for similar items in EconPapers)
JEL-codes: D73 E02 F21 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Institutional Similarity and Bilateral FDI (2019)
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DOI: 10.1007/s13132-023-01312-x

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