Institutions and FDI: evidence from developed and developing countries

Financial Innovation

Table 14 Rule of Law and FDI

Variables	Low Income Countries		Lower Middle income Countries		High income countries		Upper middle income countries
Variables	FEM	GMM	FEM	GMM	FEM	GMM	FEM	GMM
(lnFDI)_t − 1		0.575^a (0.000)		0.657^a (0.000)		0.304^a (0.000)		0.607^a (0.000)
Trade	0.010^a (0.003)	0.031^c (0.052)	0.073^a (0.000)	0.018^a (0.002)	0.133^a (0.000)	0.017^a (0.001)	0.027 (0.534)	0.045^b (0.014)
lnMobile	0.397^b (0.022)	0.338^c (0.106)	0.108 (0.300)	0.038 (0.693)	0.909^a (0.000)	0.041 (0.786)	3.698^a (0.005)	0.294 (0.356)
LnGDP per capita	12.320^b (0.021)	7.620^a (0.001)	-1.170 (0.326)	3.384^b (0.038)	9.628^a (0.000)	3.319^a (0.000)	7.257^c (0.059)	5.116^b (0.043)
Inflation	0.000^c (0.063)	0.000 (0.787)	-0.018 (0.302)	-0.014 (0.425)	0.000 (0.930)	-0.005 (0.830)	0.345 (0.250)	-0.095^a (0.003)
Agriculture value added	-0.498^b (0.014)	0.037 (0.355)	-0.101^b (0.031)	0.008 (0.725)	-0.149 (0.112)	-0.062 (0.282)	-0.145 (0.912)	0.067 (0.872)
Rule of law	-2.368 (0.508)	5.171 (0.172)	1.132 (0.147)	6.451^c (0.105)	2.685^a (0.007)	3.893^b (0.030)	6.818^a (0.001)	4.719^a (0.002)
Constant	5.536 (0.341)	17.812^c (0.055)	9.084 (0.329)	2.075^c (0.069)	7.307^a (0.000)	10.143^b (0.034)	14.791^c (0.100)	18.301^b (0.042)
AR(1)		0.000		0.000	0.390	0.000		0.0450
AR(2)		0.394		0.114		0.481		0.2240
Sargan		0.210		0.382		0.526		0.1830

Note: ^a, ^b and ^c denote significance at 1%, 5% and 10% level respectively. Parenthesis show P-values