Asia-Pacific Journal of Business (아태비즈니스연구)

KNU The Institute of Management & Economy Research (강원대학교 경영경제연구소)
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Effect of Economic Freedom on the Facilitation of FDI Inflows: Focus on the Direct and Moderating Effect by the Stage of Economic Development

경제적 자유가 외국인직접투자 촉진에 미치는 영향: 경제발전단계별 직접효과와 조절효과를 중심으로

  • Moo-Soo Kim (Department of International Trade, Dongkuk University) ;
  • Chan-Hee Lee (Department of Interdisciplinary Studies in Finance & Business Administration, Dongduk Women's University)
  • 김무수 (동국대학교 무역학과) ;
  • 이찬희 (동덕여자대학교 금융융합경영학과)
  • Received : 2022.11.30
  • Accepted : 2022.12.23
  • Published : 2022.12.30
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Abstract

Purpose - This study is to investigate the direct and moderating effect of intangible variable like economic freedom to facilitating factors on FDI(foreign direct investment) inflows and the difference of facilitating factors by the stage of economic development. Design/methodology/approach - Fixed-effect panel regression analysis with 19-year macro economic data from 2000 to 2019 including economic freedom index from Fraser Institute in 13 developed and 15 developing countries was used. Research implications or Originality - In analysis of direct effect of 5 sectors in economic freedom, the influence of economic freedom was shown weaker than other macro economic factors on FDI inflows, which indicates that actual development of economic factors are more important. The effect of economic freedom on FDI inflows at the stage of economic development differed. In developed countries, human capital, GDP, export, free trade and regulation affected FDI inflows in decreasing order, as did human capital, GDP, consumption expenditure, export, investment expenditure, government expenditure, free trade and sound money in developing countries. In analysis of moderating effect of economic freedom, a domestic and international market size, a flexible labor market which can provide a cheaper good human resources and government expenditures for improving social infrastructure under free economic environment facilitated FDI inflows. However, the statistical significance of moderating effect on export was not shown, which indicates that economic freedom policy itself without actual improvement of exports could not attract FDI inflows.

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Acknowledgement

이 논문은 2020년 대한민국 교육부와 한국연구재단의 지원을 받아 수행된 연구임(NRF-2020S1A5B5A17091662)

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