Institutional Clusters and FDI Flows to the MENA Region

Wasseem Mina ()

A chapter in Empirical Studies on Economics of Innovation, Public Economics and Management, 2017, pp 243-252 from Springer

Abstract: Abstract The empirical literature on the institutions-FDI nexus has treated the influence of institutions individually despite the correlation among them. This is a conceptual shortcoming. To overcome this limitation, we cluster institutions using Principal Component Analysis (PCA). We apply PCA to ICRG institutions for 17 Middle East and North Africa countries during the period 1984–2011. Three institutional clusters have been extracted: stability and order, quality of public administration, and presence of democratic systems. Using feasible generalized least squares estimation methodology, estimates show that stability and order and the presence of a democratic system have a positive influence on FDI flows, while the quality of public administration has a surprisingly negative influence.

Keywords: Institutions; Institutional clusters; FDI; MENA; Principal component analysis (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/978-3-319-50164-2_14

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