Financial Development and Foreign Direct Investment in Belt and Road Initiative Economies- the Moderating Effect of Human Capital

Mollah Aminul Islam, Prahallad Chandra Das, Md. Riad Hassan
2021 Zenodo  
This research aims to investigate the effect of financial development on foreign direct investment and the moderating effect of human capital in the relationship between financial development and foreign direct investment. The direct effect of human capital to foreign direct investment inflow has been found negative in earlier researches which is against common expectations. However, as human capital is an important part of financial sector of an economy, the moderation effect of these two is
more » ... t of these two is worth investigating. The research deploys sample dataset for 1999-2017 from 79 countries who are partners of Belt and Road Initiative. This sample is global representative as it contains a sample of diversified countries in terms of location, development stage and cultural traditions. The research employs fixed effect-random effect and feasible generalized least square modeling to investigate the issue. It is robustly found that while the moderating effect of human capital is considered, the negative effect of human capital to FDI fizzles out and significant positive effect of financial development and human capital on FDI emerges. Thus the policymakers of the region are suggested to concentrate on financial development and human capital development together to augment FDI attractiveness of the country for future.
doi:10.5281/zenodo.4716306 fatcat:pzpgqnf3jvcorpkwchumdvyrcq