사회 제도의 질적 성장이 해당 국가의 해외 직접투자에 미치는 영향에 관한 연구

This paper investigates if the improvement of institutional qualities promotes outward foreign direct investment (FDI) flows regardless of countries’ income levels. Institutional quality improvement reduces political risks and consequently increases economic growth in the countries. However, it is unclear whether investors and firms would increase domestic investments or foreign investments as a result of economic growth and this motivates our study. To answer this question, we use dynamic panel data models to estimate the associations between 6 different kinds of institutional quality indices from the Worldwide Governance Indicators (WGI) and outward FDI flows. We believe dynamic panel data models are suitable for the study because the models properly address the persistent nature of FDI flows. WGI indices include “voice and accountability”, “political stability and absence of violence”, “government effectiveness”, “regulatory quality”, “rule of law”, and “control of corruption” and our panel data set consist of 114 countries: 34 advanced economies and 80 emerging market economies. We find that institutional quality is positively associated with outward FDI flows both in the long and short run. This indicates relieved political risks promote international business. We postulate high institutional quality encourages international business as investors become more confident. FDI flows are persistent, safe, and key factors for economic growth; hence, our results imply that stronger institutions contribute to the global economy. This paper therefore suggests another reason why governments have to improve their institutional qualities.