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The Nexus Between Institutional Quality and Foreign Direct Investments (FDI) in South Asia: Dynamic Heterogeneous Panel Approach

The Nexus Between Institutional Quality and Foreign Direct Investments (FDI) in South Asia: Dynamic Heterogeneous Panel Approach

Mohammad Ashraful Ferdous Chowdhury
Copyright: © 2017 |Pages: 18
ISBN13: 9781522523451|ISBN10: 1522523456|EISBN13: 9781522523468
DOI: 10.4018/978-1-5225-2345-1.ch015
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MLA

Chowdhury, Mohammad Ashraful Ferdous. "The Nexus Between Institutional Quality and Foreign Direct Investments (FDI) in South Asia: Dynamic Heterogeneous Panel Approach." Outward Foreign Direct Investment (FDI) in Emerging Market Economies, edited by Tomasz Dorożyński and Anetta Kuna-Marszałek, IGI Global, 2017, pp. 293-310. https://doi.org/10.4018/978-1-5225-2345-1.ch015

APA

Chowdhury, M. A. (2017). The Nexus Between Institutional Quality and Foreign Direct Investments (FDI) in South Asia: Dynamic Heterogeneous Panel Approach. In T. Dorożyński & A. Kuna-Marszałek (Eds.), Outward Foreign Direct Investment (FDI) in Emerging Market Economies (pp. 293-310). IGI Global. https://doi.org/10.4018/978-1-5225-2345-1.ch015

Chicago

Chowdhury, Mohammad Ashraful Ferdous. "The Nexus Between Institutional Quality and Foreign Direct Investments (FDI) in South Asia: Dynamic Heterogeneous Panel Approach." In Outward Foreign Direct Investment (FDI) in Emerging Market Economies, edited by Tomasz Dorożyński and Anetta Kuna-Marszałek, 293-310. Hershey, PA: IGI Global, 2017. https://doi.org/10.4018/978-1-5225-2345-1.ch015

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Abstract

South Asia is one of the world's fastest growing regions, averaging 6.7 percent annual increases in real GDP over the past decade. However, South Asia's FDI inflows as a share of GDP are the lowest of all developing regions, averaging less than 2 percent in 2000-11(World Bank, 2013). Institutional quality is one of the factors that determine the volume of FDI inflow in any country. This study covers the data of three sampled countries of South Asia provided by the World Bank for the period 2003-2014. By using both static and dynamic models, this study reveals that regulatory quality and the political stability have significantly positive impact on the FDI inflow into each of the three countries. For Robustness, this study also employs dynamic heterogeneous panel approaches like Pool Mean Group (PMG) and found that institutional quality factors are significantly relevant to the FDI. As a policy implication, the regression results indicate that during the process of reform, the relation between FDI and institutional quality warrants a certain amount of attention.

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