Does entry business regulation deter FDI? Evidence from Dynamic Estimators
The present paper aims to examine the effects of entry business regulation on the Foreign Direct Investment (FDI) inflows (net amount) of 185 countries covering a period from 2004 to 2017. For that reason, we estimate a dynamic panel FDI specification, which additionally checks for macroeconomic and institutional factors, using Fixed Effects, Bootstrap Fixed Effects and GMM estimators. Overall, the empirical findings reveal, a negative and statistically significant association between entry regulation and FDI. This suggests that bureaucratic burdens concerning entry regulation can exert adverse effects on the inflow of FDI. Furthermore, when the full sample is separated into different income groups, our findings still indicate evidence of significance, which, however, arises only in the countries of Low and Middle-income.
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