Macroeconomic and Institutional Determinants of Foreign Direct Investment in SAARC Countries

• DOI: 10.35784/preko.6747
• Publication Date: 2025-01-10T18:06:52Z
• Authors: Jai Kumar; Chen Xi; Joti Kumari; Jinyan Huang
• Keywords: Good governance; Investment

Foreign direct investment (FDI) is considered a vital element in the development strategies of South Asian Association for Regional Cooperation (SAARC) economies. The institutional environment and macroeconomic conditions host countries play crucial roles attracting FDI. This study examines influence factors on FDI six SAARC nations – Pakistan, India, Bangladesh, Nepal, Sri Lanka, Bhutan from 2000 to 2020. research explores impact various by utilizing panel data analysis methods, specifically fixed effects (FE) two-stage least squares (TSLS). dependent variable this inflows, while independent variables include gross domestic product (GDP), financial development, inflation, infrastructure. Institutional such as government effectiveness, governance level, political stability, regulatory quality are also considered. findings indicate that all chosen significantly except effectiveness. governments should establish investment-friendly environments implement fair policies boost FDI, supporting sustainable economic growth goals (SDGs). contributes aligning with global goals, promoting inclusive growth, improving infrastructure region. It extends previous research, providing deeper insights into influencing its role progress.