DETERMINANTS OF FOREIGN DIRECT INVESTMENT INFLOWS IN THE EUROPEAN UNION (EU)
Öz
This study investigates the institutional factors influencing foreign direct investment within the Eurozone
of the European Union (EU) and explores their correlation with economic integration. Attracting foreign
direct capital investments is closely related to countries' efforts to make their institutional structures more
competitive. Because economic integrations can contribute to economic growth by allowing these
investments to increase. For his reason, the study focused on the course of foreign direct capital
investments in the Eurozone in the 2002-2022 period and the institutional determinants of these
investments were analyzed using the panel data method. The empirical analysis revealed that variables
such as foreign direct investment, government effectiveness, political stability, and accountability did not
experience any significant shocks. In the short term, a direct causal relationship between foreign direct
capital investments and corruption has been found. Nevertheless, in the long term, it has been established
that variables such as control of corruption, government effectiveness, political stability, rule of law,
accountability, and regulatory quality collectively exhibit a causal relationship with foreign direct capital
investments. These findings emphasize the importance of institutional structure for increasing foreign
direct capital investments. Enhancements in governmental efforts to combat corruption, enhance
governance effectiveness, promote political stability, uphold the rule of law, enhance accountability, and
improve regulatory quality can significantly contribute to fostering foreign direct investment. In
conclusion, this study provides valuable insights into the determinants of foreign direct investment in the
euro area and offers guidance for future policy actions.
Anahtar Kelimeler
Foreign Direct Investment, Institutional Quality, Panel Data
Kaynakça
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