Formal Institutions and Foreign Direct Investment
Thunderbird International Business Review
ISSN or ISBN
This study examines the impact of formal institutions on foreign direct investment. First, the quality (strength or weakness) of formal institutions in host countries is analyzed. Second, the absolute differences in the quality of formal institutions between the host and home countries are examined. The results show that (1) strong formal institutions in host countries positively influence FDI flows and (2) the larger the institutional distance between the home and host country, the lesser the FDI inflows.
Seyoum, Belay, "Formal Institutions and Foreign Direct Investment" (2009). HCBE Faculty Articles. 1004.