Institutional Quality in Attracting Foreign Direct Investment to Small Countries

Tajul Ariffin Masron, N.A.M Naseem, Effiezal Aswadi Abdul Wahab
  • Malaysian Journal of Economic Studies, November 2018, Univ. of Malaya
  • DOI: 10.22452/mjes.vol55no2.7

The role of institutional quality in promoting inflows of FDI in the case of small countries.

What is it about?

Improvement of institutional quality in developing countries has been seen as progressive. Unfortunately, the corresponding inflows of FDI are not proportionate with the level of better institutional quality of today. Hence, this study revisits the issues, focusing on small developing countries. The findings suggest that institutional quality is a necessary condition, but not sufficient condition in attracting FDI inflows.

Why is it important?

Focusing on institutional quality per se will not bring any significant inflows of FDI. Then, other domestic sectors should complement FDI in bringing positive consequences to better institutional quality.


Associate Professor Tajul Ariffin Masron
Universiti Sains Malaysia

While this study generally maintains the importance of good institutional quality in luring FDI inflows, its role is limited to offer the foundation for accepting FDI. whether or not FDI will inflow, other incentives may need to be offered.

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The following have contributed to this page: Associate Professor Tajul Ariffin Masron