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International evidence on the link between foreign direct investment and economic freedom


Wan Ngah, Wan Azman Saini and Tun, Yin Li and Ibrahim, Saifuzzaman (2013) International evidence on the link between foreign direct investment and economic freedom. Pertanika Journal of Social Sciences & Humanities, 21 (spec. Sep.). pp. 159-172. ISSN 0128-7702; ESSN: 2231-8534


Foreign direct investment (FDI) by multinational enterprises (MNEs) is considered as one of the key ingredients that drives the development process in many countries . However, the distribution of FDI across countries has not been uniform as only few countries have the ability to attract the bulk of FDI. In an effort to further understand the evolution in MNEs’ locational decision and their changing need, this paper examines whether economic freedom plays an important role in attracting FDI inflows. Hypothesis was tested based on the data gathered from 75 countries over the period 1981 to 2005 — using a system generalised method of moment (GMM) panel estimator. The result of this study shows the importance of economic freedom in attracting FDI inflows is undisputable. Furthermore an improvement in the freedom of economic provides a more enabling business environment.

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Additional Metadata

Item Type: Article
Divisions: Faculty of Economics and Management
Publisher: Universiti Putra Malaysia Press
Keywords: Foreign direct investment; Economic freedom; Generalised method of moment
Depositing User: Nabilah Mustapa
Date Deposited: 27 Apr 2015 02:10
Last Modified: 21 Sep 2015 01:24
URI: http://psasir.upm.edu.my/id/eprint/28325
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