Fiscal transparency and FDI, a causal assessment

In the last decade, the extraordinary growth of Foreign Direct Investments (FDI) has come together with substantial differences in different countries. Indeed many researchers have tried an assessment of the internal factor... [ view full abstract ]

In the last decade, the extraordinary growth of Foreign Direct Investments (FDI) has come together with substantial differences in different countries. Indeed many researchers have tried an assessment of the internal factor pushing enterprises to become Multi National, while others have focused on the external factors, as the international environment or the country determinants pushing or slowing down FDI. Surprisingly, this huge literature seemingly lacks a robust empirical analysis of the impact of fiscal transparency on FDI. Indeed fiscal transparency, among other beneficial effects, has been regarded to be source of the ambiance that attracts FDI: good governance, fiscal rectitude, sound resource allocation, and also accountable policy makers.
By using a panel dataset recently provided by the IMF, which includes an index of fiscal transparency for a broad and diversified set of countries during the time span from 2003 to 2013, in this work we try to fill the gap in the literature of the determinants of FDI analyzing the causal effect of fiscal transparency on FDI.