Complementarity in Institutional Quality in Bilateral FDI Flows

• Main Author: CHANG, Pao Li
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2014
• Subjects: Foreign Direct Investment; Informal Institution; Political Risk; Gravity Equation; Tobit; Economics; International Economics
• Online Access: https://ink.library.smu.edu.sg/soe_research/1604; https://ink.library.smu.edu.sg/context/soe_research/article/2603/viewcontent/20_2014.pdf
• Institution: Singapore Management University

This paper develops a theory on the complementarity in institutional qualities between the home and host countries in bilateral FDI. Firms ‘born’ in countries with poorer institutions tend to invest more in informal institutions to mitigate political risk. The marginal advantage of higher informal i...