아세안

This paper examines how capital account liberalization (CAL) affects Foreign Direct Investment (FDI) inflows. We use the System Generalized-Method-of-Moments (GMM) estimator developed for the dynamic panel model for a sample of 17 Middle East North and Africa (MENA) countries from 1985 to 2009. Our findings reveal that the positive impact of CAL on FDI depends on the political stability in a host country. Furthermore, results show that enhancing democratic institutions, enforcing property rights, reducing the risk of expropriation and the religious tension seem to be some of the most promising policies in terms of attracting FDI in the region. Also, we find that foreign investors value the quality of institutions more than the level of corruption or bureaucracy quality in the location choice. Our results are robust by using a different database of institutional qualities. Research findings are relevant for MENA countries given that many of them have engaged in a process of liberalization and have weak institutions.