The Role of Domestic Institutions for Foreign Direct Investment and Trade in Developing Countries
DOI:
https://doi.org/10.61506/Keywords:
foreign direct investment, trade, developing countriesAbstract
The present research aims mainly investigated various elements responsible to FDI & trade openness including impact on growth rate, as well as quality of institutions in a group of selected developing countries. We test this hypothesis using a linear interaction model applied to 70 developing countries between 1984 and 2022. The FDI growth effect and trade openness is positive, but its monotonic increase with the quality of institution is revealed in the estimation by GMM. Empirical studies suggest that FDI and trade openness can obviously bring positive effects if they were channelled through a high level of political stability and full pledged democracy for promoting economic growth (Hadri & Pane, 2008).
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