Democracy, Property Rights and FDI in Developing Countries: A Regional Analysis

The effect of institutional change on economic outcomes is a growing area of interest: academic and otherwise. This paper examines the influence of democracy and property rights on foreign direct investment (FDI), using data from 54 developing and transitional countries, between 1986 and 1997. Democracy and property rights are both shown to positively affect per capita FDI inflows generally; however, this paper finds regional differences in the relationship between institutions and FDI – driven largely by regional and country-specific idiosyncrasies – suggesting the absence of a consistent relationship between institutions and FDI inflows