Ease of Doing Business and Its Impact on Inward FDI

Abstract

This study investigates the impact of Ease of Doing Business on Inward FDI over the period from 2011 to 2015 across the globe. This study measures ease of doing business using starting a business, getting credit, registering property, paying taxes and enforcing contracts. The research used a sample of 177 countries from 190 countries listed in World Bank. Least square regression model via E-views software used to examine causal relationship. The study found that ease of doing business indicators ‘Enforcing Contracts’ was found to have a positive significant impact on Inward FDI. Nevertheless, ‘Getting Credit’ and ‘Registering Property’ were found to have a negative significant impact on Inward FDI. However, ‘Starting a Business’ and ‘Paying Taxes’ have no significant impact on Inward FDI in the studied time frame of this research. The findings of the study suggested the ease of doing business enables inward FDI through better contract enforcement, getting credit and registering property. The findings of the research will assist international managers and companies to know the importance of ease of doing business when investing in foreign countries through FDI.

Keywords: Ease of Doing Business; Inward FDI

JEL Classification: F02