UPM Institutional Repository

Institutional quality and foreign direct investment in ASEAN


Citation

Masron, Tajul Ariffin and Niaz Ahmad, Mohd Naseem (2017) Institutional quality and foreign direct investment in ASEAN. Institutions and Economies, 9 (4). pp. 5-30. ISSN 2232-1640; ESSN: 2232-1349

Abstract

This study aims to investigate the role of institutional quality in influencing foreign direct investment. It employs two-stage least squares (2SLS) regression analysis to minimise the risk of bias due to endogeneity issue. Institutional quality is proxied by its ratio and gap to capture simultaneous changes in institutional quality of two countries under study. The results show that institutional quality matters for foreign direct investment. More importantly, although ratio of institutional quality is statistically significant, the actual improvement in host country’s institutional quality still depends on the changes in the competing country’s institutional quality. In other words, changes in the country’s institutional quality must be significantly greater than that of the competing country to assure that host country’s changes can be attractive for foreign direct investment. It should be cautioned that institutional quality is a necessary but not a sufficient precondition to attract FDI.


Download File

[img]
Preview
Text (Abstract)
Institutional quality and foreign direct investment in ASEAN.pdf

Download (49kB) | Preview

Additional Metadata

Item Type: Article
Divisions: Faculty of Economics and Management
Publisher: Faculty Economics & Administration, University of Malaya
Keywords: ASEAN; China; Institutional quality; FDI; Panel data
Depositing User: Nabilah Mustapa
Date Deposited: 05 Oct 2018 09:53
Last Modified: 05 Oct 2018 09:53
URI: http://psasir.upm.edu.my/id/eprint/14173
Statistic Details: View Download Statistic

Actions (login required)

View Item View Item