In recent years both developed and developing countries have experienced an increasing number of government initiatives dedicated to reducing the administrative costs (AC) imposed on businesses by regulation. We use a bi-linear fixed-effects model to analyze the extent to which government initiatives to reduce AC through the Standard Cost Model (SCM) attract foreign direct investment (FDI) among 32 developing countries. Controlling for standard determinants of the SCM, we find that the SCM in most cases leads to higher FDI and that the benefits are more significant where the SCM has been implemented for a longer period.
|Number of pages
|WELTWIRTSCHAFTLICHES ARCHIV-REVIEW OF WORLD ECONOMICS
|Early online date
|2 Aug 2014
|Published - 1 Feb 2015