Economic Policies and FDI Inflows to Emerging Market Economies

Elif Arbatli Saxegaard

No 2011/192, IMF Working Papers from International Monetary Fund

Abstract: This paper investigates the determinants of FDI inflows to emerging market economies, concentrating on the effects of economic policies. The empirical analysis also addresses the role of external push factors and of political stability using a domestic conflict events database. The results suggest that lowering corporate tax rates and trade tariffs, adopting fixed or managed exchange rate policies and eliminating FDI related capital controls have played an important role. Domestic conflict events and political instability are found to have significant negative effects on FDI, which highlights the role of incluside policies to promote growth and avoid sudden stops of FDI inflows.

Keywords: WP; FDI inflow; FDI; FDI flow; Emerging Market Economies; Economic Policies; growth rate; country specific pull factors; government stability; major government crisis; government policy; crisis lead; time series; FDI inflows to EME; A. FDI inflow; moving average; Foreign direct investment; Corporate income tax; Emerging and frontier financial markets; Capital account; Real interest rates; Global; Central and Eastern Europe (search for similar items in EconPapers)
Pages: 25
Date: 2011-08-01
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Citations: View citations in EconPapers (41)

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