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Institutional, Macro Economic Policy Factors and Foreign Direct Investment: South Asian Countries Case

African Journal of Business Management, Vol. 5, Vol. 11, pp. 4306-4313, June 4, 2011

8 Pages Posted: 19 Jul 2011  

Muhammad Azam Sr.

Quaid-i-Azam University - Pakistan Institute of Development Economics (PIDE)

Hashim Khan

Iqra University - Islamabad Campus

Ahmed Imran Hunjra

Iqra University

Hafiz Mushtaq Ahmad

affiliation not provided to SSRN

Dr. Muhammad Irfan Chani

COMSATS Institute of Information Technology

Date Written: December 15, 2010

Abstract

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.

Keywords: Institutional quality, macro economic policy, attractiveness, incredibility, South Asia

Suggested Citation

Azam, Muhammad and Khan, Hashim and Hunjra, Ahmed Imran and Ahmad, Hafiz Mushtaq and Chani, Dr. Muhammad Irfan, Institutional, Macro Economic Policy Factors and Foreign Direct Investment: South Asian Countries Case (December 15, 2010). African Journal of Business Management, Vol. 5, Vol. 11, pp. 4306-4313, June 4, 2011. Available at SSRN: https://ssrn.com/abstract=1888565

Muhammad Azam Sr.

Quaid-i-Azam University - Pakistan Institute of Development Economics (PIDE) ( email )

Quaid-i-Azam University Campus
P.O.Box 1091
Islamabad, Federal Capital 44000
Pakistan

Hashim Khan

Iqra University - Islamabad Campus

5, Khayaban-e-Johar
Islamabad, H-9
Pakistan

Ahmed Imran Hunjra (Contact Author)

Iqra University ( email )

Defence View
Shaheed-e-Millat Road (Ext.)
SD 75500
+92-345-7162527 (Phone)

Hafiz Mushtaq Ahmad

affiliation not provided to SSRN ( email )

Muhammad Irfan Chani

COMSATS Institute of Information Technology ( email )

Mailsi Road
Off Multan Road
Vehari, Punjab
Pakistan

HOME PAGE: http://ww3.comsats.edu.pk/faculty/FacultyDetails.aspx?Uid=19095

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