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JournalISSN: 0378-5920

The World Economy 

Wiley-Blackwell
About: The World Economy is an academic journal published by Wiley-Blackwell. The journal publishes majorly in the area(s): Trade barrier & Free trade. It has an ISSN identifier of 0378-5920. Over the lifetime, 3525 publications have been published receiving 91916 citations.


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Journal ArticleDOI
TL;DR: In this paper, the impact of natural resources, market size, government policies, political instability and the quality of the host country's institutions on FDI has been studied and shown that countries that are small or lack natural resources can attract FDI by improving their institutions and policy environment.
Abstract: Data from several investor surveys suggest that macroeconomic instability, investment restrictions, corruption and political instability have a negative impact on foreign direct investment (FDI) to Africa. However, the relationship between FDI and these country characteristics has not been studied. This paper uses panel data for 22 countries over the period 1984–2000 to examine the impact of natural resources, market size, government policies, political instability and the quality of the host country's institutions on FDI. It also analyses the importance of natural resources and market size vis-a-vis government policy and the host country's institutions in directing FDI flows. The main result is that natural resources and large markets promote FDI. However, lower inflation, good infrastructure, an educated population, openness to FDI, less corruption, political stability and a reliable legal system have a similar effect. A benchmark specification shows that a decline in the corruption from the level of Nigeria to that of South Africa has the same positive effect on FDI as increasing the share of fuels and minerals in total exports by about 35 per cent. These results suggest that countries that are small or lack natural resources can attract FDI by improving their institutions and policy environment.

1,160 citations

Journal ArticleDOI
Abstract: While the role of exports in promoting growth in general, and productivity in particular, has been investigated empirically using aggregate data for countries and industries for a long time, only recently have comprehensive longitudinal data at the firm level been used to look at the extent and causes of productivity differentials between exporters and their counterparts which sell on the domestic market only. This papers surveys the empirical strategies applied, and the results produced, in 45 microeconometric studies with data from 33 countries that were published between 1995 and 2004. Details aside, exporters are found to be more productive than non-exporters, and the more productive firms self-select into export markets, while exporting does not necessarily improve productivity.

1,156 citations

Journal ArticleDOI
TL;DR: In this paper, the authors evaluate the role of the quality of institutions on FDI independently of the general level of development and find that a wide range of institutions, including bureaucracy, corruption, but also information, banking sector and legal institutions, do matter for inward FDI.
Abstract: In this paper, we contribute to the literature on the determinants of foreign direct investment in developing countries and re-evaluate the role of the quality of institutions on FDI independently of the general level of development. We implement cross-section estimations based on a newly available database with unprecedented detail on institutions for a set of 52 countries, as well as panel data estimations based on Fraser Institute's data. Furthermore, we control for the correlation between institutions and GDP per capita and for endogeneity of institutions. Finally, we evaluate whether the similarity of institutions between the host and the origin country raises bilateral FDI. We find that a wide range of institutions, including bureaucracy, corruption, but also information, banking sector and legal institutions, do matter for inward FDI independently of GDP per capita. Interestingly, weak capital concentration and strong employment protection tend to reduce inward FDI. Institutional proximity between the origin and the host country also matters, but we find little impact of institutions in the origin country. These results are encouraging in the sense that efforts towards raising the quality of institutions and making them converge towards those of source countries may help developing countries to receive more FDI, independently of the indirect impact of higher GDP per capita. The orders of magnitude found in the paper are large, meaning that moving from a low level to a high level of institutional quality could have as much impact as suddenly becoming a neighbour of a source country.

998 citations

Journal ArticleDOI
Laszlo Matyas1

794 citations

Journal ArticleDOI
TL;DR: In this article, a review of recent contributions reveals common conclusions about the effects of integration on location: integration weakens the incentives for self-sufficiency and for intermediate values of trade costs pecuniary externalities induce firms and workers to cluster together.
Abstract: This review of recent contributions reveals common conclusions about the effects of integration on location. For high trade costs the need to supply markets locally encourages firms to spread across different regions. Integration weakens the incentives for self-sufficiency and for intermediate values of trade costs pecuniary externalities induce firms and workers to cluster together, turning location into a self-reinforcing process. Agglomeration raises the price of immobile local factors and goods, however, so for low transport costs, firms may spread to regions where those prices are lower.(This abstract was borrowed from another version of this item.)

648 citations

Performance
Metrics
No. of papers from the Journal in previous years
YearPapers
202374
2022142
2021194
2020153
2019151
2018158