Foreign direct investment and institutional reform: evidence and an application to Portugal

Paulo Júlio, Ricardo Pinheiro–Alves () and Jose Tavares ()
Authors registered in the RePEc Author Service: Ricardo Pinheiro-Alves

Portuguese Economic Journal, 2013, vol. 12, issue 3, 215-250

Abstract: We examine the role of geographic, economic, and institutional factors in attracting Foreign Direct Investment (FDI) in Europe, using a cross-section of inward bilateral investments. We estimate and assess the expected benefits, the required reform efforts, and the efficiency of reform options corresponding to a convergence of Portuguese institutions to EU standards. We conclude that improving home institutions is likely to have a quantitatively very significant role in attracting FDI. Geographical and market size factors also play a role. Reforms promoting the independence of financial institutions and a leaner bureaucracy, lowering political risk and corruption, and improving the investment code may significantly affect the amount of bilateral inward FDI that is targeted to Portugal. Copyright ISEG 2013

Keywords: Foreign direct investment; Institutions; Institutional reform; Portugal; European union; F30; H00 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:spr:portec:v:12:y:2013:i:3:p:215-250

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DOI: 10.1007/s10258-013-0093-z

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