The Inverse Relationship Between the Informal Economy and FDI Inflows in CIS CountriesThe Inverse Relationship Between the Informal Economy and FDI Inflows in CIS Countries
- Other Titles
- The Inverse Relationship Between the Informal Economy and FDI Inflows in CIS Countries
- Authors
- 김다흰; 강문성
- Issue Date
- 2022
- Publisher
- 한국무역연구원
- Keywords
- Commonwealth of Independent States (CIS); Foreign Direct Investment; Informal Economy; Transition Economy
- Citation
- 무역연구, v.18, no.5, pp.115 - 135
- Indexed
- KCI
- Journal Title
- 무역연구
- Volume
- 18
- Number
- 5
- Start Page
- 115
- End Page
- 135
- URI
- https://scholar.korea.ac.kr/handle/2021.sw.korea/146751
- ISSN
- 1738-8112
- Abstract
- Purpose – This research investigates the impact of the informal economy on foreign direct investment (FDI) inflows. This work is the first study that has examined this issue in the case of Commonwealth of Independent States (CIS) countries.
Design/Methodology/Approach – We use a fixed-effects regression model with a panel dataset of eight CIS countries spanning 14 years (2002~2015) to shed light on the role of the informal economy in CIS countries as one of the determinants of FDI.
Findings – The results show that as the size of the informal economy increases, FDI inflows decrease, suggesting a new perspective on the informal economy’s impact on FDI, with the empirical evidence revealing a negative relationship between them in CIS countries. Based on the empirical results, it is evident that human capital, extrapolated from secondary school enrollment numbers, and openness to trade are the key components in attracting FDI to CIS countries.
Research Implications – It is clear that the informal economy is a hindrance to attracting FDI, implying that potential foreign investors have concerns about the informal economic system because where their properties cannot be protected in a formal legal system. These results suggest that the governments of CIS countries should reduce the size of their informal economy to create an FDI-friendly environment.
- Files in This Item
- There are no files associated with this item.
- Appears in
Collections - ETC > 1. Journal Articles
Items in ScholarWorks are protected by copyright, with all rights reserved, unless otherwise indicated.