International Journal of Accounting & Finance in Asia Pasific
Vol 8, No 1 (2025): February 2025

Analysis of Institutional Quality Impact on Foreign Direct Investment: A Case Study of Countries in America, Asia, and Europe

Suripto, Suripto (Unknown)
Prihandika, Galih Dwi (Unknown)
Khoirudin, Rifki (Unknown)



Article Info

Publish Date
20 Feb 2025

Abstract

Countries worldwide are making development efforts to improve the welfare of their people. Significant investment is needed to accelerate economic growth. This study examines the impact of institutional, macroeconomic, and social quality on foreign direct investment (FDI). The method used is the two-step Generalized Method of Moments (GMM). The study's subjects include 94 countries worldwide located in America (26 countries), Asia (33 countries), and Europe (35 countries) over the period 2002 – 2021. The secondary data collection used in this study is sourced from the World Development Indicators (WDI) and World Governance Indicators (WGI). The results of the study show that, simultaneously, all independent variables affect FDI in all models. Meanwhile, the results indicate that institutional quality is more effective in Europe than in America and Asia. Additionally, FDI in the previous period significantly impacts FDI in all models. This study also concludes that inflation and labor force have consistent significance in almost all models, indicating that these variables play an important role in FDI.

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Journal Info

Abbrev

IJAFAP

Publisher

Subject

Decision Sciences, Operations Research & Management Economics, Econometrics & Finance

Description

IJAFAP aims to feature narrative, theoretical, and empirical-based research articles within the abovementioned fields. The journal welcomes articles relating to the current issues of financial decision making as well as its impact on society. IJAFAP carries out the mission to feature narrative, ...