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Institutional quality and foreign direct investment in ASEAN

This study aims to investigate the role of institutional quality in influencing foreign direct investment. It employs two-stage least squares (2SLS) regression analysis to minimise the risk of bias due to endogeneity issue. Institutional quality is proxied by its ratio and gap to capture simultaneou...

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Main Authors: Masron, Tajul Ariffin, Niaz Ahmad, Mohd Naseem
Format: Article
Language:English
Published: Faculty Economics & Administration, University of Malaya 2017
Online Access:http://psasir.upm.edu.my/id/eprint/14173/1/Institutional%20quality%20and%20foreign%20direct%20investment%20in%20ASEAN.pdf
http://psasir.upm.edu.my/id/eprint/14173/
https://ijie.um.edu.my/index.php/ijie/article/view/6269
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spelling my.upm.eprints.141732018-10-05T09:53:39Z http://psasir.upm.edu.my/id/eprint/14173/ Institutional quality and foreign direct investment in ASEAN Masron, Tajul Ariffin Niaz Ahmad, Mohd Naseem This study aims to investigate the role of institutional quality in influencing foreign direct investment. It employs two-stage least squares (2SLS) regression analysis to minimise the risk of bias due to endogeneity issue. Institutional quality is proxied by its ratio and gap to capture simultaneous changes in institutional quality of two countries under study. The results show that institutional quality matters for foreign direct investment. More importantly, although ratio of institutional quality is statistically significant, the actual improvement in host country’s institutional quality still depends on the changes in the competing country’s institutional quality. In other words, changes in the country’s institutional quality must be significantly greater than that of the competing country to assure that host country’s changes can be attractive for foreign direct investment. It should be cautioned that institutional quality is a necessary but not a sufficient precondition to attract FDI. Faculty Economics & Administration, University of Malaya 2017 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/14173/1/Institutional%20quality%20and%20foreign%20direct%20investment%20in%20ASEAN.pdf Masron, Tajul Ariffin and Niaz Ahmad, Mohd Naseem (2017) Institutional quality and foreign direct investment in ASEAN. Institutions and Economies, 9 (4). pp. 5-30. ISSN 2232-1640; ESSN: 2232-1349 https://ijie.um.edu.my/index.php/ijie/article/view/6269
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description This study aims to investigate the role of institutional quality in influencing foreign direct investment. It employs two-stage least squares (2SLS) regression analysis to minimise the risk of bias due to endogeneity issue. Institutional quality is proxied by its ratio and gap to capture simultaneous changes in institutional quality of two countries under study. The results show that institutional quality matters for foreign direct investment. More importantly, although ratio of institutional quality is statistically significant, the actual improvement in host country’s institutional quality still depends on the changes in the competing country’s institutional quality. In other words, changes in the country’s institutional quality must be significantly greater than that of the competing country to assure that host country’s changes can be attractive for foreign direct investment. It should be cautioned that institutional quality is a necessary but not a sufficient precondition to attract FDI.
format Article
author Masron, Tajul Ariffin
Niaz Ahmad, Mohd Naseem
spellingShingle Masron, Tajul Ariffin
Niaz Ahmad, Mohd Naseem
Institutional quality and foreign direct investment in ASEAN
author_facet Masron, Tajul Ariffin
Niaz Ahmad, Mohd Naseem
author_sort Masron, Tajul Ariffin
title Institutional quality and foreign direct investment in ASEAN
title_short Institutional quality and foreign direct investment in ASEAN
title_full Institutional quality and foreign direct investment in ASEAN
title_fullStr Institutional quality and foreign direct investment in ASEAN
title_full_unstemmed Institutional quality and foreign direct investment in ASEAN
title_sort institutional quality and foreign direct investment in asean
publisher Faculty Economics & Administration, University of Malaya
publishDate 2017
url http://psasir.upm.edu.my/id/eprint/14173/1/Institutional%20quality%20and%20foreign%20direct%20investment%20in%20ASEAN.pdf
http://psasir.upm.edu.my/id/eprint/14173/
https://ijie.um.edu.my/index.php/ijie/article/view/6269
_version_ 1643825553401184256
score 13.211869

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