HCBE Faculty Articles

Title

Informal Institutions and Foreign Direct Investment

Document Type

Article

Date

2011

Publication Title

Journal of Economic Issues

ISSN or ISBN

1946-326X

Volume

45

Issue

4

First Page

917

Last Page

940

Description

Foreign direct investment (FDI) inflows cannot solely be determined by conventional variables such as availability of natural resources, high skilled manpower or modern infrastructure. Important explanations also include the crucial role of institutions in attracting investment flows. This study explores the role of informal institutions in investment flows as well as the relationship between formal and informal institutions in the context of FDI flows. The term "informal institutions" has been used to describe a diverse set of practices such as corruption or culture thus leading to a serious conceptual ambiguity. This study attempts to provide a more precise and analytically useful definition. It builds on the Helmke and Levitsky typology of informal institutions.

DOI

10.2753/JEI0021-3624450409

Peer Reviewed

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