Interaction of Economic Freedom and Foreign Direct Investment Globally: Special Cases from Neglected Regions
Journal of Economics and Financial Analysis, Vol.1, No.1, pp.59-80
22 Pages Posted: 21 Jun 2017
Date Written: February 20, 2017
This paper studies the macroeconomic impact of economic freedom on foreign direct investments inflows in both global and regional panel analyses involving 156 countries through the period of 1995-2016. Unlike to prior literature, it includes often neglected nations such as Fragile and Conflict-Affected states, Sub-Saharan, Oceanian, and Post-Soviet countries. The paper finds a positive impact of economic freedom on FDI under fixed-effects model in global case where a unit change in economic freedom scales FDI inflows up to 1.15 units. More specifically, all 9 regions also refer to positive and significant impact of economic freedom on FDI. The highest impact is recorded in European countries, whereas the lowest ones are documented in Fragile-Conflict affected states, Sub-Saharan zone, and Oceanian countries.
Keywords: Economic Freedom, Openness of Economy, Foreign Direct Investments, Neglected Regions, Panel Data Analysis.
JEL Classification: C33, F00, F21.
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