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Property Rights as a Determinant of Foreign Direct Investments - A qualitative and quantitative study

Olsson, Kerstin LU (2014) NEKN01 20141
Department of Economics
Abstract
This study has its starting point in the fact that not all developing countries are equally successful in attracting foreign direct investments (FDI). Consequently, this study examines the determinants of FDI in a developing country. In previous research, there has been a recent shift of focus to the institutional environment of the host countries as a determinant of FDI. In line with this development, this study further examines property rights as a determinant of FDI. To meet this objective, both a qualitative and a quantitative study is conducted. The result of the qualitative study provides evidence of the importance of market size, natural resources, human capital, infrastructure, investment climate, and property rights as... (More)
This study has its starting point in the fact that not all developing countries are equally successful in attracting foreign direct investments (FDI). Consequently, this study examines the determinants of FDI in a developing country. In previous research, there has been a recent shift of focus to the institutional environment of the host countries as a determinant of FDI. In line with this development, this study further examines property rights as a determinant of FDI. To meet this objective, both a qualitative and a quantitative study is conducted. The result of the qualitative study provides evidence of the importance of market size, natural resources, human capital, infrastructure, investment climate, and property rights as determinants of FDI in the cut flower industry in Kenya. Based on interviews with investors and stakeholders, the result highlights the importance of property rights protection to land, and identifies both market and non-market transaction costs in FDI. In order to draw general conclusions on the determinants of FDI in a developing country, the qualitative result is put in relation to the result of the quantitative study. The quantitative study is performed through a regression analysis of 55 developing countries over the time period 1980-2010. The quantitative result confirms the positive effect of property rights protection, market size, human capital, and openness to trade on FDI. The consistency of the qualitative result of the Kenyan cut flower industry, and the quantitative regression result of FDI across industries, developing countries and over time, provide overall the results of this study with robustness. (Less)
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author
Olsson, Kerstin LU
supervisor
organization
course
NEKN01 20141
year
type
H1 - Master's Degree (One Year)
subject
keywords
Kenya, Foreign Direct Investment, FDI, Property rights, Instrumental variable approach
language
English
id
4611294
date added to LUP
2014-09-22 11:44:14
date last changed
2014-09-22 11:44:14
@misc{4611294,
  abstract     = {{This study has its starting point in the fact that not all developing countries are equally successful in attracting foreign direct investments (FDI). Consequently, this study examines the determinants of FDI in a developing country. In previous research, there has been a recent shift of focus to the institutional environment of the host countries as a determinant of FDI. In line with this development, this study further examines property rights as a determinant of FDI. To meet this objective, both a qualitative and a quantitative study is conducted. The result of the qualitative study provides evidence of the importance of market size, natural resources, human capital, infrastructure, investment climate, and property rights as determinants of FDI in the cut flower industry in Kenya. Based on interviews with investors and stakeholders, the result highlights the importance of property rights protection to land, and identifies both market and non-market transaction costs in FDI. In order to draw general conclusions on the determinants of FDI in a developing country, the qualitative result is put in relation to the result of the quantitative study. The quantitative study is performed through a regression analysis of 55 developing countries over the time period 1980-2010. The quantitative result confirms the positive effect of property rights protection, market size, human capital, and openness to trade on FDI. The consistency of the qualitative result of the Kenyan cut flower industry, and the quantitative regression result of FDI across industries, developing countries and over time, provide overall the results of this study with robustness.}},
  author       = {{Olsson, Kerstin}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Property Rights as a Determinant of Foreign Direct Investments - A qualitative and quantitative study}},
  year         = {{2014}},
}