Foreign direct investment and institutional reform: Evidence and an application to Portugal

Paulo Júlio, Ricardo Pinheiro-Alves, José Tavares

Research output: Contribution to journalArticlepeer-review

12 Citations (Scopus)

Abstract

We examine the role of geographic, economic, and institutional factors in attracting Foreign Direct Investment (FDI) in Europe, using a cross-section of inward bilateral investments. We estimate and assess the expected benefits, the required reform efforts, and the efficiency of reform options corresponding to a convergence of Portuguese institutions to EU standards. We conclude that improving home institutions is likely to have a quantitatively very significant role in attracting FDI. Geographical and market size factors also play a role. Reforms promoting the independence of financial institutions and a leaner bureaucracy, lowering political risk and corruption, and improving the investment code may significantly affect the amount of bilateral inward FDI that is targeted to Portugal.

Original languageEnglish
Pages (from-to)215-250
Number of pages36
JournalPortuguese Economic Journal
Volume12
Issue number3
DOIs
Publication statusPublished - Dec 2013

Keywords

  • European union
  • Foreign direct investment
  • Institutional reform
  • Institutions
  • Portugal

Fingerprint

Dive into the research topics of 'Foreign direct investment and institutional reform: Evidence and an application to Portugal'. Together they form a unique fingerprint.

Cite this