Influence of institutional quality, labor and infrastructure development on foreign direct investments: Evidence from Asia and the Pacific Region

• Main Authors: Patiu, Liberty S., Eleazar, Vivian Y.
• Format: text
• Published: Animo Repository 2020
• Subjects: Investments, Foreign—Pacific Area; International Economics
• Online Access: https://animorepository.dlsu.edu.ph/faculty_research/9477
• Institution: De La Salle University

Asia and the Pacific Region had become one of the most popular destination or host of foreign direct investments among multinational firms from different economies worldwide. Researches indicates that it facilitates in providing sustainable economic growth. Large disparities in the levels of development of these economies in the region, existing business climate and other institutional frameworks served as roadblocks for FDI to flourish.The study aims to determine the impact of institutional quality, labor and infrastructure on FDI Inflows in Asia and the Pacific Region for the period 2002-2015. A panel data regression model was utilized, using aggregate dataset from the World Bank database to examine the nature and extent of the impact of institutional quality, labor and infrastructure development on FDI inflows relationship between the dependent and independent variables before and after the Global Financial Crisis. It was found that voice & accountability and the provision of better communication infrastructure through a country’s mobile cellular subscription have negative and significant effect on the inward direct investments in the region prior to the global financial crisis. On the other hand, regulatory quality and voice and accountability proved to have significant impact on FDI inflows after the crisis. This only shows that investors view the importance of the institutional underpinnings on how they make investment decision. This provides pertinent policy implications among economies in the promotion of greater foreign direct investments into and within the region though the provision of conducive environment and infrastructure development to attract long-term investments.