Ranynda Niarachma
Universitas Padjadjaran

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The Effect of Governance on FDI Inflows in ASEAN Ranynda Niarachma; Nury Effendi; Eva Ervani
Optimum: Jurnal Ekonomi dan Pembangunan Vol. 11 No. 1 (2021)
Publisher : Universitas Ahmad Dahlan

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.12928/optimum.v11i1.3620

Abstract

This study examines the effect of governance on FDI inflows in ASEAN countries for the period 2002-2018 using the Worldwide Governance Indicator (WGI) index. This study uses a principal component analysis (PCA) method to reduce six WGI indexes and performs panel data regression analysis using fixed-effect GLS (cross-section weights). This study uses data from World Bank for FDI, WGI, and several control variables.  The results of this study have provided empirical evidence that good governance is a very important key factor in encouraging FDI inflows to host countries. This study finds three governance elements that have a positive relationship with FDI inflows in ASEAN countries are the quality of regulations, rule of law, and control of corruption.Â