Main Article Content
This study aims to investigate the role of institutional quality in influencing foreign direct investment. It employs two-stage least squares (2SLS) regression analysis to minimise the risk of bias due to endogeneity issue. Institutional quality is proxied by its ratio and gap to capture simultaneous changes in institutional quality of two countries under study. The results show that institutional quality matters for foreign direct investment. More importantly, although ratio of institutional quality is statistically significant, the actual improvement in host country’s institutional quality still depends on the changes in the competing country’s institutional quality. In other words, changes in the country’s institutional quality must be significantly greater than that of the competing country to assure that host country’s changes can be attractive for foreign direct investment. It should be cautioned that institutional quality is a necessary but not a sufficient precondition to attract FDI.
Submission of a manuscript implies: that the work described is original, has not been published before (except in the form of an abstract or as part of a published lecture, review, or thesis); that is not under consideration for publication elsewhere; that its publication has been approved by all co-authors, if any, as well as tacitly or explicitly by the responsible authorities at the institution where the work was carried out. Transfer of copyright to the University of Malaya becomes effective if and when the article is accepted for publication. The copyright covers the exclusive right to reproduce and distribute the article, including reprints, translations, photographic reproductions, microform, electronic form (offline and online) or other reproductions of similar nature.
An author may self-archive the English language version of his/her article on his/her own website and his/her institution’s repository; however he/she may not use the publisher’s PDF version which is posted on www.ijie.um.edu.my. Furthermore, the author may only post his/her version, provided acknowledgement is given to the original source of publication and a link must be accompanied by the following text: “The original publication is available at www.ijie.um.edu.my”.
All articles published in this journal are protected by copyright, which covers the exclusive rights to reproduce and redistribute the article (e.g. as offprint), as well as all translation rights. No material published in this journal may be reproduced photographically or stored on microfilm, in electronic database, video disks, etc., without first obtaining written permission from the publishers. The use of general descriptive names, trade names, trademarks, etc., in this publication, even if not specifically identified, does not imply that these names are not protected by the relevant laws and regulations.
The copyright owner’s consent does not include copying for general distribution, promotion, new works, or resale. In these cases, specific written permission must first be obtained from the publishers.