Foreign direct investment and the ease of doing business
Corcoran, Adrian and Gillanders, RobertORCID: 0000-0001-9462-0005
(2014)
Foreign direct investment and the ease of doing business.
Review of World Economics, 151
(1).
pp. 103-126.
ISSN 1610-2878
This paper examines the effect that a country’s business regulatory environment has
on the amount of foreign direct investment it attracts. We use the World Bank’s Ease
of Doing Business ranking to capture the costs that firms face when operating in a
country. Several interesting results emerge. Firstly, the Doing Business rank is highly
significant when included in a standard empirical FDI model estimated on data averaged
over the period 2004-2009. Secondly, the significance of the overall Doing Business is
driven by the Ease of Trading Across Borders component. Thirdly, the relationship is
significant for middle income countries, but not for the World’s poorest region, SubSaharan
Africa, or for the OECD. Finally, we find no evidence that the ease of doing
business of nearby countries has an effect on the FDI that a country gets in general.