Institutional, Macro Economic Policy Factors and Foreign Direct Investment: South Asian Countries Case
Muhammad Azam Sr.
Quaid-i-Azam University - Pakistan Institute of Development Economics (PIDE)
Iqra University - Islamabad Campus
Ahmed Imran Hunjra
Hafiz Mushtaq Ahmad
affiliation not provided to SSRN
Dr. Muhammad Irfan Chani
COMSATS Institute of Information Technology
December 15, 2010
African Journal of Business Management, Vol. 5, Vol. 11, pp. 4306-4313, June 4, 2011
Recent economic literature suggests that institutional quality factors exert positive effect on foreign direct investment (FDI) inflows. The main focus of this study is to examine the role of institutional factors and macro economic policy factors on FDI inflows in a panel data of seven South Asian countries over the period of 12 years since 1996 to 2007. This study implies that a good institutional quality plays a key role in attractiveness of FDI inflows. A poor macroeconomic policy situation produces negative impact on FDI. Good Institutional quality and poor macroeconomic policy generate negative effect in a combined form on FDI. This study further implies that poor macro economic policy deteriorates institutional quality and creates negative effect on FDI inflows. Incredibility in trade liberalization policy may be a part of poor macro economic policy.
Number of Pages in PDF File: 8
Keywords: Institutional quality, macro economic policy, attractiveness, incredibility, South Asia
Date posted: July 19, 2011