Improvements in the World Bank’s Ease of Doing Business Rankings : Do they Translate into Greater Foreign Direct Investment Inflows?
The World Bank's Ease of Doing Business reports have been ranking countries since 2006. However, do improvements in rankings generate greater foreign direct investment inflows? This study is the first to test such a proposition empirically wit...
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110906093409 http://hdl.handle.net/10986/3550 |
| Summary: | The World Bank's Ease of Doing
Business reports have been ranking countries since 2006.
However, do improvements in rankings generate greater
foreign direct investment inflows? This study is the first
to test such a proposition empirically with Arellano-Bond
dynamic panel estimators using the official rankings from
2006 to 2009. The paper shows this relationship is
significant for the average country. However, when the
sample is restricted to developing countries, the results
suggest an improved ranking has, on average, an
insignificant (albeit positive) influence on foreign direct
investment inflows. Although robust, this result should be
taken with caution given that it refers to the average
developing country using data across a four-year time
period. Finally, the paper demonstrates that, on average,
countries that undertake large-scale reforms relative to
other countries do not necessarily attract greater foreign
direct investment inflows. This analysis may have important
ramifications for developing country governments wanting to
improve their Doing Business Rankings in the hope of
attracting foreign direct investment inflows. |
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