2017 RISE Poster Template - Horizontal
Undergraduate Category: Humanities & Arts Degree Seeking: Political Science and Comm. Studies Abstract ID# 1963
Clearing the Soot: How Economic Freedom Affects Foreign Direct Investment Yohan B. Morris
Abstract Over the past three decades, developing countries have increasingly looked to Foreign Direct Investment (FDI) as a means to develop and modernize. In order to attract FDI, countries have often taken particular steps to improve on the principal determinants, that influence the locational choices of investors. One method that countries have broadly employed has been the use of pro-market reforms which are essentially changes to a markets institutional framework that strive to liberalise the economy and improve national governance. Although this strategy is commonplace amongst developing nations attempting to attract FDI, case in point India, there is extremely contrasting research on the principle factors that are said to influence foreign investors. To this end, this paper aims to investigate how economic freedom influences inflows of foreign direct investment.
Key Questions • Why does FDI matter? • What does Economic Freedom have to do with FDI? • Does a liberalized economy lead to higher FDI inflows? If yes, is this guaranteed?
Argument • Before investing foreign Investors heavily consider the quality of the institutions that will have power over them – the institutions usually being host governments. • Government policies regarding tariffs, profit repatriation corporate tax rates, specialized tax incentives and market flexibility influence potential investors.
Framing the relationship between Economic Freedom and FDI Country
Economic Freedom
FDI Inflow
Discussion
Hong Kong
Score: 89.9
$180.8 Billion
• Hong Kong thrives on its strict Rule of Law and prides itself on a zero tolerance for corruption and high government integrity.
Rank: #1
• Increased protection of property rights, reduced government intervention and a general reduction in barriers to capital flows and FDI result in higher FDI inflows . Indonesia
Method
• A comparative case study of three Asian Countries: Hong Kong SAR, Indonesia & India. • Countries have been selected on the basis that they rank economically: free, moderately free and mostly unfree respectively. • A specific case study as such will permit for further investigation into what aspect of economic freedom has most significance to FDI, whether it be trade freedom, financial freedom or investment freedom etc.
Score: 61.0
• The dynamic city excels in all categories of Economic Freedom however especially in areas of: Property Rights, Business Freedom and overall fiscal health (which is a 100/100) $20 Billion
Rank: #84
India
Score: 52.6 Rank: #143
• Indonesia ranks low in respect to institutional quality i.e. property rights and government integrity • The country excels in three key areas that could explain its investment inflows: Trade freedom, low tax burden and monetary freedom
$44 Billion
• Corruption and a lack of proper management of public finances– reflected in its poor score on government integrity and fiscal health--hinders India’s ability to attract FDI • Recently, India has facilitated pro-market reform and has improved drastically in areas Monetary and trade freedom
References
Heritage Foundation EF Index & World Bank
Clearing the Soot: How Economic Freedom Affects Foreign Direct Investment Yohan B. Morris
Abstract Over the past three decades, developing countries have increasingly looked to Foreign Direct Investment (FDI) as a means to develop and modernize. In order to attract FDI, countries have often taken particular steps to improve on the principal determinants, that influence the locational choices of investors. One method that countries have broadly employed has been the use of pro-market reforms which are essentially changes to a markets institutional framework that strive to liberalise the economy and improve national governance. Although this strategy is commonplace amongst developing nations attempting to attract FDI, case in point India, there is extremely contrasting research on the principle factors that are said to influence foreign investors. To this end, this paper aims to investigate how economic freedom influences inflows of foreign direct investment.
Key Questions • Why does FDI matter? • What does Economic Freedom have to do with FDI? • Does a liberalized economy lead to higher FDI inflows? If yes, is this guaranteed?
Argument • Before investing foreign Investors heavily consider the quality of the institutions that will have power over them – the institutions usually being host governments. • Government policies regarding tariffs, profit repatriation corporate tax rates, specialized tax incentives and market flexibility influence potential investors.
Framing the relationship between Economic Freedom and FDI Country
Economic Freedom
FDI Inflow
Discussion
Hong Kong
Score: 89.9
$180.8 Billion
• Hong Kong thrives on its strict Rule of Law and prides itself on a zero tolerance for corruption and high government integrity.
Rank: #1
• Increased protection of property rights, reduced government intervention and a general reduction in barriers to capital flows and FDI result in higher FDI inflows . Indonesia
Method
• A comparative case study of three Asian Countries: Hong Kong SAR, Indonesia & India. • Countries have been selected on the basis that they rank economically: free, moderately free and mostly unfree respectively. • A specific case study as such will permit for further investigation into what aspect of economic freedom has most significance to FDI, whether it be trade freedom, financial freedom or investment freedom etc.
Score: 61.0
• The dynamic city excels in all categories of Economic Freedom however especially in areas of: Property Rights, Business Freedom and overall fiscal health (which is a 100/100) $20 Billion
Rank: #84
India
Score: 52.6 Rank: #143
• Indonesia ranks low in respect to institutional quality i.e. property rights and government integrity • The country excels in three key areas that could explain its investment inflows: Trade freedom, low tax burden and monetary freedom
$44 Billion
• Corruption and a lack of proper management of public finances– reflected in its poor score on government integrity and fiscal health--hinders India’s ability to attract FDI • Recently, India has facilitated pro-market reform and has improved drastically in areas Monetary and trade freedom
References
Heritage Foundation EF Index & World Bank
