Munich Personal RePEc Archive

Impact of Human Development Index and Rule of Law to Attract Foreign Direct Investment in Selected Developing Countries

mollaesmaeili dehshiri, hassan and sameti, Morteza and sameti, Majid (2012): Impact of Human Development Index and Rule of Law to Attract Foreign Direct Investment in Selected Developing Countries.

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MPRA_paper_81479.pdf

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MPRA_paper_81479.pdf

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Abstract

Capital is the driving force of economic growth and development and the optimal utilizations of resources and capital are the most important factors in achieving economic growth and development. Foreign direct investment is one of the best methods in industrial projects’ financing and investing. Therefore, in line with the economic growth and development it is necessary to identify those factors which affect the FDI and to determine the influence degree of each to make a proper policy in this area. Human development index and rule of law are the effective factors which influence the absorption of FDI and this varies according to different economic governments. The main purpose of this paper is to investigate effects of human development index and rule of law on attracting FDI. In order to assess each of these factors’ influence, we consider the FDI as a function of GPD, exchange rate, inflation, human development index and rule of law, the data is collected in 23 developing countries between 2001-2010 and a model is provided by using regression of panel data. The results of model estimation confirm the study hypothesis which is on the basis of positive and significant impacts of human development index and rule of law on the attraction of FDI.

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