The Effect of Economic Freedom Index on Foreign Direct Investments: The Case of MINT Countries

Abstract

The aim of this study is to investigate the effect of economic freedom index on foreign direct investment in MINT Countries including Mexico, Indonesia, Nigeria and Turkey. Using a panel data model covering the period 1995-2020 and these 4 countries, we tested how the economic freedom index affects FDI inflows in the region. As a result of Pedroni and Kao cointegration tests, it has been understood that the amount of foreign investment made to countries in the long run is related to the economic freedom index of the countries. Contrary to the findings of the previous literature, according to the DOLS MG estimator; It has been determined that a 1-unit change in the economic freedom index causes a 9.9 percent decrease in foreign direct investments. Country-based results show that a 1-unit increase in the economic freedom index causes a 13.2% decrease in Mexico and a 12% decrease in Indonesia. This result indicates that FDI may not have adequate links with business establishments and institutions in host countries and therefore FDI does not contribute much to property protection, improvement of the legal system and voluntary exchange.

Keywords

• Economic Freedom
• MGE and DOLS MG estimator
• FDI
• MINT Countries

Ekonomik Özgürlük Endeksinin Doğrudan Yabancı Yatırımlara Etkisi: MINT Ülkeleri Örneği

Abstract

Bu çalışmanın amacı Meksika, Endonezya, Nijerya ve Türkiye’nin yer aldığı MINT Ülkelerinde ekonomik özgürlük endeksinin ülkeye yapılan doğrudan yabancı yatırım üzerindeki etkisini araştırmaktır. 1995-2020 dönemini ve bu 4 ülkeyi kapsayan bir panel veri modeli kullanarak, ekonomik özgürlük endeksinin bölgedeki Doğrudan Yabancı Yatırım girişlerini nasıl etkilediğini test edilmiştir. Pedroni ve Kao eşbütünleşme testleri sonucunda uzun vadede ülkelere yapılan yabancı yatırım tutarı ülkelerin ekonomik özgürlük endeksi ile ilişkili olduğu anlaşılmıştır. Önceki literatürün bulgularının aksine DOLS MG tahmincisine göre; ekonomik özgürlük endeksindeki 1 birimlik değişimin doğrudan yabancı yatırımlar üzerinde 9,9’luk bir azalışa neden olduğu tespit edilmiştir. Ülke bazlı sonuçlar ise ekonomik özgürlük endeksindeki bir birimlik artışın Meksika’da 13,2’lik, Endonezya’da ise % 12’lik azalışa neden olduğunu göstermektedir. Bu sonuç DYY'nin ev sahibi ülkelerdeki ticari kuruluşlar ve kurumlarla yeterli bağlantılara sahip olmayabileceğini ve bu nedenle DYY'nin mülkiyetin korunmasına, yasal sistemin iyileştirilmesine ve gönüllü mübadeleye fazla bir şey katmadığını göstermektedir.

Keywords

• Ekonomik Özgürlük
• MGE ve DOLS MG tahmincisi
• DYY
• MINT Ülkeleri

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