The Role of Institutional Quality on FDI: A Comparison for Pre and Post – Global Financial Crises
Year: 2024
Type: article
Abstract: In this study, the relative importance of institutional quality indicators on foreign direct investment (FDI) is investigated using a dynamic panel regression model for the countries that attracted the most FDI between 1996-2021. The World Bank (2023) data shows that FDI inflows gained a significant momentum at the beginning of the 2000s and reached its highest level in 2007. However, the Global Financial Crises (GFC) created a turning point in FDI inflows and it followed a very volatile course in the following years. For this reason, the analysis focused on the periods pre and post the global financial crisis. As a result of the study, it is revealed that all institutional quality indicators (except the rule of law) have positive effects on FDI inflows in the pre-crisis period, and regulatory effectiveness, government effectiveness and corruption control have a relatively higher impact on FDI inflows. On the other hand, it has been determined that no institutional quality indicator has a significant effect on foreign direct investments in the post-crisis period when FDI inflows are highly volatile.
Authors: Nur Koç, Dilek Durusu Çiftçi
Institutions: Ankara Hacı Bayram Veli University, Pamukkale University
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4404213279