Foreign Direct Investment and The Ease of Doing Business
|Title:||Foreign Direct Investment and The Ease of Doing Business||Authors:||Corcoran, Adrian
|Permanent link:||http://hdl.handle.net/10197/3777||Date:||Jul-2012||Abstract:||This paper examines the effect that a country’s business regulatory environment has on the amount of foreign direct investment it attracts. We use the World Bank’s Ease of Doing Business ranking to capture the costs that firms face when operating in a country. Several interesting results emerge. Firstly, the Doing Business rank is highly significant when included in a standard empirical FDI model estimated on data averaged over the period 2004-2009. Secondly, the significance of the overall Doing Business is driven by the Ease of Trading Across Borders component. We argue that this is a more intuitively appealing proxy for trade costs than the often used openness variable. The relationship does not seem to exist for the World’s poorest region, Sub-Saharan Africa, or for the OECD. Finally, we find no evidence that the ease of doing business of nearby countries has an effect on the FDI that a country gets in general. However, in terms of attracting FDI from the US, it helps to be near countries with good trade regulation and bad regulation in other respects.||Funding Details:||Not applicable||Type of material:||Working Paper||Publisher:||University College Dublin. School of Economics||Keywords:||Foreign direct investment;Business regulation||Subject LCSH:||Investments, Foreign
|Language:||en||Status of Item:||Not peer reviewed|
|Appears in Collections:||Economics Working Papers & Policy Papers|
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