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Economia Politica

, Volume 36, Issue 1, pp 167–204 | Cite as

How do informal institutions influence inward FDI? A systematic review

  • Jasmine MondoloEmail author
Original Paper
  • 191 Downloads

Abstract

In the last 15 years, the literature on international economics and international business has been paying increasing attention to informal institutions and to how they affect a variety of economic variables, inward FDI in particular. The main aims of this work are: to shed more light on a puzzling, elusive concept -informal institutions- also by drawing comparisons with related constructs; to overview the main types of informal institution and their effects on FDI inflows; to conduct a meta-analysis to explore the heterogeneity across empirical studies focusing on the effects of informal institutions on FDI inflows. The main findings of the present work are as follows: according to most of the existing literature, informal institutions, such as trust, social networks and corruption, matter for the purpose of attracting FDI. The sign is significantly determined by the type of informal institution considered. In particular, social networks and factors typically facilitating or in favour of FDI—such as trust and a positive attitude to liberalism—have a significant and positive impact on inward FDI, and this especially holds when the host country is a developing economy.

Keywords

Informal institutions FDI Systematic review 

JEL Classification

A13 D02 F21 

Notes

Acknowledgements

I thank Roberto Antonietti for his useful suggestions on previous version of the manuscript. This research received no specific grants from funding agencies in the public, commercial, or not-for-profit sectors.

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Authors and Affiliations

  1. 1.Department of Economics and ManagementUniversity of PadovaPaduaItaly

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