Decentralization and Foreign Direct Investment : Impact of Fiscal and Political Decentralization on FDI Inflow

초록

We examine the interactive effects of political decentralization and fiscal decentralization on foreign direct investment. We argue that the positive effect of fiscal decentralization on FDI inflow becomes stronger with the political decentralization. Empirically, we test the argument using Hooghe et al. (2015)’s original dataset on Regional Authority Index and analyze 81 countries for the period 1970 to 2010. The empirical results suggest that in general, fiscally and politically decentralized host countries receive more FDI inflow.

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