This paper assesses the impact of institutional factors on foreign direct investment (FDI) attractiveness using a pool of 25 emerging host countries (ECs) for the period 1996–2012. In particular, the paper aims to examine whether higher institutional quality and good governance do improve FDI attractiveness, and thereby to identify which institutional factors are the main drivers of FDI in ECs. Using a static and dynamic panel gravity model with various estimation techniques, we find that FDI is positively and significantly influenced by political stability, government effectiveness and regulatory quality. The remaining set of governance indicators is found to be statistically significant and negatively linked to FDI. Our findings also show that factors like a larger GDP per capita difference between investing partner and ECs, higher degree of trade openness and better infrastructure have positive and significant effects on FDI attractiveness. These results have important policy implications for ECs. Fostering FDI inflows into these countries requires policymakers to improve the quality of their institutions and business climate through implementing sound economic policies and regulations.

中文翻译：

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善政对外国直接投资有影响吗？新兴国家使用静态和动态面板重力模型方法的新证据

本文使用1996-2012年期间的25个新兴东道国（EC）评估了制度因素对外国直接投资（FDI）吸引力的影响。特别是，本文旨在检验较高的机构质量和良好的治理是否确实提高了外国直接投资的吸引力，从而确定哪些制度因素是欧共体外国直接投资的主要驱动力。通过使用具有各种估算技术的静态和动态面板重力模型，我们发现外国直接投资受到政治稳定性，政府效力和监管质量的积极和显着影响。发现其余的治理指标集具有统计意义，并且与外国直接投资负相关。我们的研究结果还表明，诸如投资伙伴与EC的人均GDP差异更大等因素，贸易开放程度的提高和基础设施的改善对外国直接投资的吸引力产生了积极而重大的影响。这些结果对EC具有重要的政策意义。鼓励外国直接投资流入这些国家，要求政策制定者通过实施合理的经济政策和法规来改善其机构的质量和商业环境。