| المستخلص: |
The relationship between democracy and FDI flows has attracted a great attention on the worldwide level during recent years. The role of nontraditional factors(political and civil rights- which mean democracy , governance, &other institutional factors) has become more important than the role of traditional factors (such as GNI per capita ,economic growth rates, openness to trade and the reform of foreign exchange regimes) in determining FDI flows. Despite recent trends toward globalization ,&market opening to foreign direct investment in most countries, there are no encouraged results of FDI flows to non democracy countries accordingly, this paper tries to examine empirically the impact of democracy on FDI , using time- series-cross- section analysis. It hypothesizes that "under globalization the more democratic countries. Can attract more FDI than less democratic countries " The study uses a sample of 80 countries during the period (1980-2004), and classify counties to democratic &non democratic. Evidence from time- series - cross - section analysis suggests that the results are robustly consistent with the hypothesis, indicating that: -On the average, FDI flows are higher to democratic countries, -the FDI flows to democratic countries are 37%higher than those to non democratic countries. The impact of FDI on growth in democratic countries is greater than the impact in non - democratic countries. The responsiveness of FDI to democracy index the greater to its responsiveness to globalization index ,since the elasticity of FDI to Democracy is 15.4%, 204% to non-democratic & democratic Countries respectively, But the values of elasticity of FDI to globalization is 4% & 2% to non- democratic & democratic Countries respectively. Accordingly under globalization no country could success In attractive the desired level of FDI which posting growth without improving its democracy Framework.
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