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Title Implications of Ease of Doing Business for Foreign Direct Investment: A Panel Data Analysis of Asian Countries

Author(s) Ms. Farzana Shaheen

Abstract The study observes the overall business behavior in forty-five (45) Asian countries enlisted on the World Bank’s doing business index over the period from 2004 to 2019. The ten areas of doing business index are served as the explanatory variable in the study. The focus variables uses in study are GDPPC, inflation, population, and interest rate. The data of the variables extracted from the world development indicator and world doing business index. The study found the empirical association among doing business index indicators and foreign direct investment. This study strive to answer the question of why Asian nations entitled the highest FDI recipient countries over the world. Further, study found which business index indicators captured the greater attraction of foreign investors. For estimation purpose, the study uses fixed effect, random effect and two step instrumental variable technique. Doing business index indicators including starting a business, getting connection of electricity, getting construction permits, and registering the property when transferred, show statistically significant positive implication for FDI. In the same way, getting credit, protecting minority investors, resolving insolvency, and contract enforcement show statistically significant positive consequences for the inflow of FDI. There are only two factors, paying tax and trade across the border, show significant negative relation with FDI inflow. In order to attract more FDI, outcomes of the study help the policy maker to enhance the business environment in terms of the factors of ease of doing business. However, study recommends that; to improve FDI inflows significantly in future, there is greater need to improve efficiency in the enforcement of contracts, fair distribution of electricity and energy, improving taxes procedures and compliance enforcement and correctly dealing with construction permits.

Type Thesis/Dissertation MS

Faculty Management Sciences

Department Economics

Language English

Publication Date 2020-06-23

Subject Economics

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