Journal of Economics and Financial Analysis, 1 (1), pp. 59-80, [2017]
URI: https://ojs.tripaledu.com/index.php/jefa/article/view/6/3

Interaction of Economic Freedom and Foreign Direct Investment Globally: Special Cases from Neglected Regions




DOI: http://dx.doi.org/10.1991/jefa.v1i1.a4

Abstract

This paper studies the macroeconomic impact of economic freedom on foreign direct investments inflows in both global and regional panel analyses involving 156 countries through the period of 1995-2016. Unlike to prior literature, it includes often neglected nations such as Fragile and Conflict-Affected states, Sub-Saharan, Oceanian, and Post-Soviet countries. The paper finds a positive impact of economic freedom on FDI under fixed-effects model in global case where a unit change in economic freedom scales FDI inflows up to 1.15 units. More specifically, all 9 regions also refer to positive and significant impact of economic freedom on FDI. The highest impact is recorded in European countries, whereas the lowest ones are documented in Fragile-Conflict affected states, Sub-Saharan zone, and Oceanian countries.

Keywords

Economic Freedom; Openness of Economy; Foreign Direct Investments; Neglected Regions; Panel Data Analysis.

JEL Classification

C33, F00, F21.

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