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

Abstract

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.

Suggested Citation

Sovbetov, Yhlas, Interaction of Economic Freedom and Foreign Direct Investment Globally: Special Cases from Neglected Regions (February 20, 2017). Journal of Economics and Financial Analysis, Vol.1, No.1, pp.59-80. Available at SSRN: https://ssrn.com/abstract=2989714

Yhlas Sovbetov (Contact Author)

London School of Commerce ( email )

London
United Kingdom

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