Does FDI Regulatory Policies Influence FDI Inflows in Developing Countries? A Non Linear Analysis
Journal Title: Pakistan Journal of Economic Studies - Year 2023, Vol 6, Issue 3
Abstract
Purpose: Foreign Direct Investment (FDI) inflow is regarded as highly important particularly for developing countries as it enhances economic activities and creates job opportunities. The main objective of the present study is to analyze the impact of two regulatory policies i.e. Regulatory Restrictiveness Index (RRI) and Ease of Doing Business (EDB) on FDI inflows in developing countries. Research Gap: Not many studies have discussed the role of more than one regulatory policy to examine their impact on FDI inflows. Therefore, the present study is an attempt to bridge this research gap as it uses two regulatory policies to examine this relationship. Design/Methodology/Approach: The study performs the non-linear analysis using two separate models to determine FDI inflows in 39 developing countries for the period 1997-2020.For this purpose FGLS econometric technique is utilized. The Main Findings: The linearized marginal effects of RRI show that all the countries are located on the left side of U shaped curve while linearized marginal effects of EDB show that some countries lie on the left side and others lie on the right side of U shaped curve. The higher value of the level coefficient than the value of the quadratic coefficient reveals the stronger influence of level coefficients in both models. Theoretical/Practical Implications of the Findings: The study concludes that developing countries need to reduce FDI restrictions to attract maximum FDI inflows. Furthermore, it is recommended that for improving the confidence of foreign investors, appropriate and consistent policies should be designed and implemented.
Authors and Affiliations
Nabila Asghar, Quarrat- Ul- Ain, Hafeez U Rehman
Keywords
Related Articles
- EP ID EP735734
- DOI -
- Views 47
- Downloads 1
An Empirical Analysis of Safe Drinking Water and Quality of Life
Increasing water stress has become a global concern as it has severe consequences for the quality of human life. The available studies suggest links between water and quality of life, but do not provide empirical evidenc...
Empirical Analysis of Effects of Expected Inflation on Stock Returns
We adopted asymmetric test specification model to investigate implications of expected inflation on stock returns. While to calculate expected inflation, two methods, Fama money demand model (1981) and ARMA model were em...
Impact of infrastructural inefficiency on the citizens of Karachi(A case of green line bus project of Karachi)
The object on this project is to capture impact the infrastructural inefficiencies on the daily route on the public. In order to execute our research we have selected one of the recently on-going projects of “Green Line...
Impact of Industrial Production and FDI on CO2 Emissions in Pakistan
The impact of industrial growth and Foreign Direct Investment (FDI) on Carbon Dioxide (CO2) emission is not an ignorable issue. The environmental issues have always affected the developing countries. In this stu...
Does Fiscal Decentralization Improve Gender Parity in Employment? Evidence from Pakistan
Pakistan has 48.76% female population, however, this population faces many hurdles in labor force participation, since their participation in the labor force is only 29% (world bank, 2021). There are so many...