The Formal and Informal Framework of Foreign Direct Investment - Economic Research Forum (ERF)

The Formal and Informal Framework of Foreign Direct Investment

Pierre-Guillaume Méon and Khalid Sekkat

December, 2013


18 pages

C3. Multiple or Simultaneous Equation Models
F2. International Factor Movements and International Business

This paper studies the impact of social trust and formal legal and institutional determinants of foreign direct investment inflows and investment in a panel of countries. It reports that formal determinants and trust interact, and that the two are substitutes. Namely, the marginal impact of formal measures decreases with trust and vice versa.



تدرس هذه الورقة تأثير الثقة الاجتماعية والمحددات القانونية والمؤسسية الرسمية من تدفقات الاستثمار الأجنبي المباشر والاستثمار في عدد من البلدان. تشير التقارير الرسمية أن محددات الثقة والتفاعل، هما فى الواقع بدائل. وبالتحديد يتناقص التأثير الهامشي من التدابير الرسمية مع الثقة والعكس بالعكس.

Pierre-Guillaume Méon

Research Fellows

Khalid Sekkat

Full Professor of Economics, University of Brussels



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