TITLE:
Regulatory Quality and Foreign Direct Investment: A Case Analysis of North Macedonia
AUTHORS:
Biljana Kuzmanoska Mirkovikj, Pavlos Gkasis, Petros Golitsis
KEYWORDS:
Foreign Direct Investment (FDI), Gross Domestic Product (GDP), Regulatory Quality Index, Econometric Modeling, Economic Development
JOURNAL NAME:
Theoretical Economics Letters,
Vol.14 No.5,
October
31,
2024
ABSTRACT: The present study investigates how governance affects Foreign Direct Investment (FDI) inflows by using North Macedonia as a case study to focus on the relationship between FDI and regulatory quality in a small economy setting. FDI is crucial for economic growth in emerging economies, and regulatory quality is a key factor influencing investment inflows. Using econometric modeling and data from 2002 to 2022, the study tests whether improved regulatory quality boosts FDI. The analysis, which includes control variables like GDP growth, inflation, and economic openness, shows that stronger regulatory quality increases FDI inflows. Additionally, economic growth and inflation positively correlate with FDI, highlighting the importance of fostering growth and considering inflation-targeting policies to attract investment. These insights are valuable for policymakers and investors looking to enhance small economies’ economic growth and subsequent development.