REVISITING THE RELATIONSHIP BETWEEN GOVERNANCE AND FOREIGN DIRECT INVESTMENT PIERRE-GUILLAUME MÉON * AND KHALID SEKKAT**

Using a sample of 96 countries over the nineties, this paper examines the extent to which different dimensions of governance affect FDI inflows. It considers six aspects of governance. The results of a least-squares estimation suggest a positive relationship between institutional quality and FDI. However, when the issue of the endogeneity of governance is tackled thanks to 2SLS regressions, the relationship appears much weaker. JEL CLASSIFICATION: C33, F21, F41, O17