The Impact of Regulatory Quality on Intra-Foreign Direct Investment Flows in the ASEAN Markets

International Business Review, Vol.15, Issue 4, pp. 401-414, August 2006

Posted: 4 Aug 2009

See all articles by Hussain Gulzar Rammal

Hussain Gulzar Rammal

University of Technology Sydney (UTS)

Ralf Zurbruegg

University of Adelaide; Financial Research Network (FIRN)

Date Written: 2006

Abstract

Using a panel data set containing information on FDI flows from home to host countries, this paper examines the impact of changes in the quality of government regulatory effectiveness and governance practices upon the direction of outward FDI flows between five ASEAN economies of Indonesia, Malaysia, Philippines, Singapore, and Thailand. The results show that a deterioration in the effectiveness and enforcement of investment regulations (such as price controls and excessive regulation in foreign trade and business development) have an adverse effect upon intra-ASEAN FDI, and are significant factors in explaining the recent downward trend in ASEAN FDI flows. These results are robust to changes in a number of controlling variables for various economic conditions that the extant FDI literature consider. Also, these results have several significant implications for future policy makers in recommending means to revitalize intra-ASEAN investment.

Keywords: foreign direct investment policy, investment incentives, Intra-ASEAN FDI

JEL Classification: F14, F15, G38

Suggested Citation

Rammal, Hussain Gulzar and Zurbruegg, Ralf, The Impact of Regulatory Quality on Intra-Foreign Direct Investment Flows in the ASEAN Markets (2006). International Business Review, Vol.15, Issue 4, pp. 401-414, August 2006. Available at SSRN: https://ssrn.com/abstract=1442783

Hussain Gulzar Rammal (Contact Author)

University of Technology Sydney (UTS) ( email )

15 Broadway, Ultimo
PO Box 123
Sydney, NSW 2007
Australia

HOME PAGE: http://www.uts.edu.au/staff/hussain.rammal

Ralf Zurbruegg

University of Adelaide ( email )

233 North Terrace
Department of Finance
Adelaide SA 5005
Australia
+61 8 8303 5535 (Phone)
+61 8 8303 4368 (Fax)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

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