Title: The effect of institutional distance on foreign direct investment in Thailand

Authors: Siwapong Dheera-aumpon; Piyaphan Changwatchai

Addresses: Department of Economics, Kasetsart University, Bangkok, 10900, Thailand ' Department of Economics, Kasetsart University, Bangkok, 10900, Thailand

Abstract: Inward foreign direct investment (FDI) is important for Thailand in terms of increasing value added and productivity while also fostering economic growth. The analysis of FDI determinants is necessary in order to promote inward FDI. This research then aims to study the FDI determinants focusing on institutional distance. This research uses secondary data from 2006-2019 and covers 32 home countries/Special Administrative Region. The results reveal that institutional distance between Thailand and home country, home country's GDP, Thailand's GDP, and international investment agreements have positive effects on Thailand's inward FDI. When each dimension of institutional distance is considered, institutional distance in terms of control of corruption; political stability and absence of violence; and rule of law has a positive effect on Thailand's inward FDI.

Keywords: institutional distance; institution; institutional environment; FDI; foreign direct investment; Thailand.

DOI: 10.1504/IJMEF.2024.139025

International Journal of Monetary Economics and Finance, 2024 Vol.17 No.2/3, pp.221 - 228

Received: 24 Aug 2022
Accepted: 12 Jan 2023
Published online: 10 Jun 2024 *

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