scholarly journals Ranking of Developing Countries Based on the Economic Freedom Index

2013 ◽  
Vol 2 ◽  
pp. 32-38
Author(s):  
Mohsen Mehrara ◽  
Masoumeh Zirak
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Economic Freedom ◽  
Cape Verde ◽  
Economic Openness ◽  
Economic Freedom Index ◽  
Determinants Of Fdi

In this paper we’ve ranked developing countries based on the Economic Freedom index. Therefore we are trying to do the analysis how this ranking is done using numerical taxonomic methodology. To do this, by estimating the effects of the determinants of FDI in 123 developing countries from 1997 to 2010, results showed that with regard to the degree of economic freedom or Economic openness, attract foreign direct investment in each country is different. In this study china, Equator, Liberia, Azerbaijan, Angola, Turkmenistan, Cape Verde, Kazakhstan, Panama, Vietnam, Bulgaria, Congo, Maldives, Bahrain, Cambodia, Jordan, Malaysia, Mongolia, Sudan, Trinidad, Belarus, Lesotho, Russian are the top 23 countries have been successful in attracting foreign direct investment thanks to appropriate economic and structures policies.

scholarly journals Foreign Direct Investment, Economic Freedom and Economic Growth: Evidence from Developing Countries

2016 ◽  
Vol 8 (11) ◽  
pp. 200 ◽  
Author(s):  
Md. Shakib Hossain
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Foreign Direct Investment ◽  
Standard Deviation ◽  
Poisson Regression ◽  
Direct Investment ◽  
Economic Freedom ◽  
Random Effect ◽  
Estimating Equation ◽  
Generalized Estimating Equation

<p class="Default">This paper has explores the interplay between economic freedom, foreign direct investment and economic growth using panel data analysis for a sample of 79 developing countries from 1998 to 2014 by considering the level of economic freedom, as provided by the “Heritage Foundation”. Panel unit root, pedroni residual co-integration test, generalized least square (GLS), feasible GLS (FGLS), pooled OLS, random effect, fixed effect, poisson regression, prais-winsten, generalized method of movement (GMM) and generalized estimating equation (GEE) methods have used to estimates the relationship. According to the OLS and generalized method of movement the coefficient implies that a one standard deviation improvement in business freedom, trade freedom, size, investment freedom, property rights, freedom from corruption, labor freedom, financial freedom, fiscal freedom, monetary freedom increases FDI by 21.4%, 15.6%, 21.6%, 17.5%, 11.55, 9.1%, 6.9%, 8.5%, 7.4%, 10.3% and 56.1%, 45.3%, 58.3%, 51.6%, 33.7%, 39.2%, 47.4%, 41.6%, 32.5%, 38.5% points respectively and  for the economic variable ,the coefficient implies that a one standard deviation improvement in GDPG and GDPPC increases FDI by 24.1%, 17.4% and 30.2%, 33.4% points respectively. By using the other method like random effect, fixed effect, poisson regression, prais-winsten and generalized estimating equation (GEE) method explores that economic freedom in the host country is a positive determinants of FDI inflows in developing countries and also the result suggests that foreign direct investment is positively correlated with the economic growth in the host countries.</p>

scholarly journals The Economic Determinants of Foreign Direct Investment in Developing Countries and Transition Economies

2008 ◽  
Vol 47 (3) ◽  
pp. 285-299
Author(s):  
İSmail ÇEviŞ ◽  
Burak ÇAmurdan
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Panel Data ◽  
Transition Economies ◽  
Direct Investment ◽  
Inflation Rate ◽  
Host Countries ◽  
Fdi Inflows ◽  
Economic Determinants ◽  
Determinants Of Fdi

The economic growth rates have dramatically increased in developing economies, such as in Latin American, Asian, and Eastern European countries, following the financial liberalisation attempt, especially during the 1990s. Foreign direct investment (FDI) has become an increasingly important element for economic development and integration of developing countries and transition economies in this period with the world economy. The main purpose of this study is to develop an empirical framework to estimate the economic determinants of FDI inflows by employing a panel data set of 17 developing countries and transition economies for the period of 1989:01-2006:04. In our model there are seven explanatory economic variables. They are, respectively, the previous period FDI (the pull factor for new FDI), GDP growth (measures market size), Wage (unit labour costs), Trade Rate (measures the openness of countries), the real interest rates (measures macroeconomic policy), inflation rate (as country risk and macroeconomic policy), and domestic investment (Business Climate). Hence, throughout the paper, only the economic determinants (being separated and apart from the other studies in the literature) of FDI inflows to developing countries and transition economies are studied. It is found out that the previous period FDI which is directly related to the host countries’ economic resources is important as an economic determinant. Besides, it is also understood that the main determinants of FDI inflows are the inflation rate, the interest rate, the growth rate, and the trade (openness) rate and FDI inflows give power to the economies of host countries. JEL classification: F21, R19, C23 Keywords: Foreign Direct Investment, the Determinants of FDI, the Developing Countries, Transition Economies, Panel Data Analysis

On the foreign direct investment–economic growth relationship in Africa: does economic freedom mediate this relationship?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Olufemi Adewale Aluko ◽  
Muazu Ibrahim ◽  
Xuan Vinh Vo
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Economic Freedom ◽  
Empirical Literature ◽  
African Countries ◽  
Content Type ◽  
Economic Freedom Index ◽  
Bootstrap Algorithm ◽  
The Impact

PurposeIn this study, the authors examine how economic freedom mediates the impact of foreign direct investment (FDI) on economic growth in Africa.Design/methodology/approachBy using data from 41 countries over the period 2000–2017, the authors invoke Seo and Shin's (2016) sample splitting approach while relying on the recently developed Seo et al.'s (2019) computationally robust bootstrap algorithm to achieve the purpose of this study.FindingsThe authors find evidence of economic freedom threshold that bifurcates the link between FDI and economic growth in Africa. More precisely, FDI does not improve overall economic growth for African countries whose economic freedom index is below the estimated threshold while significantly spurring growth for African countries with economic freedom above this threshold.Practical implicationsAfrican countries need to strive towards improving their level of economic freedom through the strengthening of rule of law, reducing government size, promoting regulatory efficiency and further opening of the goods and capital markets.Originality/valueThe association between FDI and economic growth has been well documented. While the positive theoretical postulations are almost conclusive, empirical literature on the precise effect of FDI remains contentious and far from being settled. What is missing in the existing literature in Africa is whether countries' level of economic freedom mediates how FDI explains the variations in economic growth across African countries. The authors fill this research gap.

The contribution of human capital to foreign direct investment inflows in developing countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ali Abbas ◽  
Imad Moosa ◽  
Vikash Ramiah
Keyword(s):  
Developing Countries ◽  
Human Capital ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Statistical Significance ◽  
Regression Equation ◽  
Basic Question ◽  
Content Type ◽  
Extreme Bounds Analysis ◽  
Determinants Of Fdi

PurposeThis paper is about the effect of human capital on foreign direct investment (FDI). The purpose of this paper is to find out if developing countries with high levels of human capital (educated people and well-trained labour force) are more successful in attracting FDI. The underlying hypothesis has been tested repeatedly without reaching a consensus view or providing an answer to the basic question. This is to be expected because FDI is determined by a large number of factors, making the results sensitive to the selected set of explanatory variables, which forms the basis of the Leamer (1983) critique of the use of multiple regression to derive inference. Furthermore, confirmation bias and publication bias entice researchers to be selective in choosing the set of results they report.Design/methodology/approachThe technique of extreme bounds analysis, as originally suggested by Leamer (1983) and modified by Sala-i-Martin (1997), is used to determine the importance of human capital for the ability of developing countries to attract FDI. The authors use a cross-sectional sample covering 103 developing and transition countries.FindingsThe results show no contradiction between firms seeking human capital and cheap labour. No matter what proxy is used to represent human capital, it turns out that the most important factor for attracting FDI is the variable “employee compensation”, which is the wage bill, implying that multinational firms look for cheap and also skilled labour in the host country.Originality/valueIn this paper, the authors follow the procedure prescribed by Leamer (1983), and modified by Sala-i-Martin (1997), using extreme bounds analysis to distinguish between robust and fragile determinants of FDI, with particular emphasis on human capital. Instead of deriving inference from one regression equation by determining the statistical significance of the coefficient on the variable of interest, the extreme bounds or the distribution of estimated coefficients are used to distinguish between robust and fragile variables. This means that emphasis is shifted from significance, as implied by a single regression equation, to robustness, which is based on a large number of equations. The authors conduct tests on three proxies for human capital to find out if they are robust determinants of FDI and also judge the degree of robustness relative to other determinants.

scholarly journals The Determination of Economic Freedom in Foreign Direct Investment Inflows to the Balkans States and Turkey

2014 ◽  
Author(s):  
Bedriye Tunçsiper ◽  
Ömer Faruk Biçen
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Economic Freedom ◽  
Development Aid ◽  
Growth Potential ◽  
Time Dimension ◽  
Domestic Markets ◽  
The Balkans

Foreign direct investment (FDI) are an important external savings resource for the developing countries that have problems with financing of growth and development. The transformation that started in the global economic system from 1980’s substituted other capital types, major of them are FDI, instead of official development aid. Nevertheless, the foreign direct investment pulling competition have started among developing countries. The papers in this side imply that the countries having broad domestic markets, high economic growth potential, an improved infrastructure and human capital level have advantages on pulling FDI. Moreover, some papers in last years reflect that economic freedom is also an important determinative in addition to other determinatives of FDI. The main aim of this paper is to analyze the determination of economic freedom on the FDI that inflow to the Balkan states and Turkey. In the paper using 1994-2012 time dimension, the countries added to the analysis are Turkey, Bulgaria, Greece, Romania, Macedonia, Albania and Croatia. The results with panel regression method showed that some economic freedom indices supported the inflows of FDI in this countries.

scholarly journals Traditional And Non-Traditional Determinants Of Foreign Direct Investment In Developing Countries

2011 ◽  
Vol 20 (1) ◽  
Author(s):  
Simran K. Kahai
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
International Trade ◽  
Host Country ◽  
Empirical Model ◽  
Direct Investment ◽  
Economic Freedom ◽  
Institutional Factors ◽  
Qualitative Factors

This paper extends previous studies on the determinants of Foreign Direct Investment (FDI) by looking at both traditional and non-traditional factors that influence the amount of FDI flowing to developing countries. Emphasis is placed on the role of non-traditional qualitative factors. Data from 1998 and 2000 for fifty-five developing countries are employed to estimate an empirical model of FDI. Results indicate that FDI is significantly affected by several qualitative factors such as the level of economic freedom, level of corruption, and the level of international trade regulations adopted in the host country. These findings support the need for increased considera- tion of cultural and institutional factors in attempting to better estimate and understand the devel- opment process.

Determinants of foreign direct investment inflow to the agricultural sector: a panel-data analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Seyed Reza Zeytoonnejad Mousavian ◽  
Seyyed Mehdi Mirdamadi ◽  
Seyed Jamal Farajallah Hosseini ◽  
Maryam Omidi NajafAbadi
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Panel Data ◽  
Host Country ◽  
Direct Investment ◽  
Agricultural Sector ◽  
Fdi Inflows ◽  
Content Type ◽  
Main Determinants ◽  
Determinants Of Fdi

PurposeForeign Direct Investment (FDI) is an important means of boosting the agricultural sectors of developing economies. The first necessary step to formulate effective public policies to encourage agricultural FDI inflow to a host country is to develop a comprehensive understanding of the main determinants of FDI inflow to the agricultural sector, which is the main objective of the present study.Design/methodology/approachIn view of this, we take a comprehensive approach to exploring the macroeconomic and institutional determinants of FDI inflow to the agricultural sector by examining a large panel data set on agricultural FDI inflows of 37 countries, investigating both groups of developed and developing countries, incorporating a large list of potentially relevant macroeconomic and institutional variables, and applying panel-data econometric models and estimation structures, including pooled, fixed-effects and random-effects regression models.FindingsThe general pattern of our findings implies that the degree of openness of an economy has a negative effect on FDI inflows to agricultural sectors, suggesting that the higher the degree of openness in an economy, the lower the level of agricultural protection against foreign trade and imports, and thus the less incentive for FDI to inflow to the agricultural sector of the economy. Additionally, our results show that economic growth (as an indicator of the rate of market-size growth in the host economy) and per-capita real GDP (as an indicator of the standard of living in the host country) are both positively related to FDI inflows to agricultural sectors. Our other results suggest that agricultural FDI tends to flow more to developing countries in general and more to those with higher standards of living and income levels in particular.Originality/valueFDI inflow has not received much attention with respect to the identification of its main determinants in the context of agricultural sectors. Additionally, there are very few panel-data studies on the determinants of FDI, and even more surprisingly, there are no such studies on the main determinants of FDI inflow to the agricultural sector. We have taken a comprehensive approach by studying FDI inflow variations across countries as well as over time.

scholarly journals Does Institutional Quality and Economic Freedom Impact on Foreign Direct Investment? Evidence From Developing Countries

2018 ◽  
Vol 8 (4) ◽  
pp. 324
Author(s):  
Shakib Hossain ◽  
Abu Zafar Ahmed Mukul
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Poisson Regression ◽  
Direct Investment ◽  
Economic Freedom ◽  
Random Effect ◽  
Institutional Quality ◽  
Estimating Equation ◽  
The Other ◽  
Generalized Estimating Equation

Using panel data analysis, it is an attempt to estimates the significance of institutional quality and economic freedom on foreign direct investment for a sample of 79 developing countries from 1998 to 2014. Panel unit root, pedroni residual cointegration test, vector error correction model, generalized least square (GLS), feasible GLS (FGLS), pooled OLS, random effect, fixed effect, poisson regression, prais-winsten, generalized method of movement (GMM) and generalized estimating equation (GEE) method are utilizing for estimates the importance of institutional qualities and economic freedom for facilitating foreign direct investment. VECM confirms that there is a long run relationship among the tested variables means that commensurate institutional quality and substantive economic freedom stimulates foreign direct investment. According to the OLS method ,for the institutional quality the coefficient implies that a one standard deviation improvement in political stability and absence of violence, government effectiveness, regulatory qualities, rules of law and control of corruption increases FDI by 24.6%, 31.6%, 12.8%, 23.9% and 37.7% and on the other hand for the economic freedom , the coefficient implies that a one standard deviation improvement in business freedom, trade freedom, government size, investment freedom, property rights, freedom from corruption, labor freedom, financial freedom, fiscal freedom, monetary freedom increases FDI by 28.4%, 32.7%, 29.5%,22.8%, 29.0%, 36.4%,29.3%, 37.5%, 46.1% and 38.2% respectively. By using the other methods like random effect, fixed effect, poisson regression, prais-winsten and generalized estimating equation (GEE) method explores that both the institutional quality and economic freedom are influencing on FDI in the developing countries.

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