Ease of Doing Business and Foreign Direct Investment Inflows: Evidence from Emerging Economies

Padmaja Mundakkad ()
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Padmaja Mundakkad: National Institute of Technology Tiruchirappalli, Tiruchirappalli, India

Economic Research Guardian, 2021, vol. 11, issue 1, 47-63

Abstract: Emerging and developing countries has become major attraction for FDI inflows in recent years. Even though existing studies examine the role of host country factors in determining FDI inflows, there is only limited evidence on the role of governance and restrictions in determining FDI inflows. This paper examines the impact of Doing Business Rankings data from Ease of Doing Business report published by World Bank to account for DBR and the restrictions firms face for operating in their country. Using a panel data of 84 emerging countries from 2006 – 2018 the study examine the effect of improvement in Doing Business Rankings (DBR) on FDI inflows. The key questions examined are 1) whether ease of doing business improves the FDI inflows to the country 2) whether improvement of DBR effects FDI inflows to the country. Using Arellano-Bond dynamic panel GMM, the study suggests that improvements in doing business rankings leads to significant improvement in FDI inflows. However, large improvements in DBR does not result in attracting more FDI inflows.

Keywords: Doing business; Foreign direct investment (FDI); Business regulations (search for similar items in EconPapers)
JEL-codes: F21 F23 O11 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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