TY - JOUR
T1 - How FDI inflows to emerging markets are influenced by country regulatory factors: An exploratory study
AU - Contractor, Farok
AU - Nuruzzaman, N
AU - Dangol, Ramesh
AU - Raghunath, S
PY - 2021/1/22
Y1 - 2021/1/22
N2 - Foreign Direct Investment (FDI) inflows to emerging nations exhibit a big variation. To what extent do host-country regulatory and institutional variables attract or repel FDI? We integrate various theoretical perspectives: transaction cost economics, global value chain analysis and liability of foreignness to examine the impact of formal regulations, rule-of-law, property rights, procedural bottlenecks and infrastructure on the attractiveness of an emerging market over a 12 year period. We seek to identify which of the many regulatory variables most influence the FDI decision. We find that countries with more efficient start-up regulations, stronger protection of minority investment, and better procedures and infrastructure for international trade across their borders attract more FDI. These results have important implications for government policy reform in emerging markets, as well as for multinationals selecting which nations to invest in.
AB - Foreign Direct Investment (FDI) inflows to emerging nations exhibit a big variation. To what extent do host-country regulatory and institutional variables attract or repel FDI? We integrate various theoretical perspectives: transaction cost economics, global value chain analysis and liability of foreignness to examine the impact of formal regulations, rule-of-law, property rights, procedural bottlenecks and infrastructure on the attractiveness of an emerging market over a 12 year period. We seek to identify which of the many regulatory variables most influence the FDI decision. We find that countries with more efficient start-up regulations, stronger protection of minority investment, and better procedures and infrastructure for international trade across their borders attract more FDI. These results have important implications for government policy reform in emerging markets, as well as for multinationals selecting which nations to invest in.
KW - Foreign direct investment
KW - Regulations
KW - Ease of doing business
U2 - 10.1016/j.intman.2021.100834
DO - 10.1016/j.intman.2021.100834
M3 - Article
SN - 1075-4253
VL - 27
JO - Journal of International Management
JF - Journal of International Management
IS - 1
M1 - 100834
ER -