ZahraZahra Dehghan Shabani; Saeedeh Afarineshfar
Abstract
One of the factors affecting foreign direct investment is the ease of doing business. The world bank’s doing business report provides the indices of the ease of doing business. These indices measure the difficulty, costs and time it would take a standardized mid-sized company to start the business, ...
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One of the factors affecting foreign direct investment is the ease of doing business. The world bank’s doing business report provides the indices of the ease of doing business. These indices measure the difficulty, costs and time it would take a standardized mid-sized company to start the business, deal with construction permits, register property, get credit, pay taxes, import and export goods, enforce contracts and complete the bankruptcy process. It also measures the level of protection for investors. Inappropriate doing business decrease inflows of FDI because it increases production cost, increases risk of starting a new business, inappropriate size of the company, reduces the interactions between companies and reduces the financial participations. Thus, the aim of this article is to analyze the effects of doing business on foreign direct investment by using Dynamic Panel Data model for 29 countries over the period 2003-2012. The results show that improved political stability, control of corruption, economic globalization, starting a business, protecting minority investors, enforcing contracts, closing a business, paying taxes and gross domestic product increase foreign direct investment flows.
