Institutional Clusters and FDI Flows to the MENA Region

    Research output: Chapter in Book/Report/Conference proceedingChapter

    1 Citation (Scopus)


    The empirical literature on the institutions-FDI nexus has treated the influence of institutions individually despite the correlation among them. This is a conceptual shortcoming. To overcome this limitation, we cluster institutions using Principal Component Analysis (PCA). We apply PCA to ICRG institutions for 17 Middle East and North Africa countries during the period 1984–2011. Three institutional clusters have been extracted: stability and order, quality of public administration, and presence of democratic systems. Using feasible generalized least squares estimation methodology, estimates show that stability and order and the presence of a democratic system have a positive influence on FDI flows, while the quality of public administration has a surprisingly negative influence.

    Original languageEnglish
    Title of host publicationEurasian Studies in Business and Economics
    PublisherSpringer Science and Business Media B.V.
    Number of pages10
    Publication statusPublished - 2017

    Publication series

    NameEurasian Studies in Business and Economics
    ISSN (Print)2364-5067
    ISSN (Electronic)2364-5075


    • FDI
    • Institutional clusters
    • Institutions
    • MENA
    • Principal component analysis

    ASJC Scopus subject areas

    • General Economics,Econometrics and Finance
    • General Business,Management and Accounting


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