Thesis advisor: Robert G. Murphy / Rule of law has recently emerged as a possible solution for the promotion of functioning market economies and economic growth in developing countries. It has been argued that an established legal system provides individuals with a clear understanding of the law and consequently, should be more influential on the behavior and decisions of those individuals. This study explores the effects of an established rule of law environment on the relationship between foreign direct investment and economic growth. Several previous studies have analyzed the direct relationship between foreign investment and economic growth. However, none of these studies control for varying levels of legal incentives and property protection. Established legal institutions provide the type of stability that makes investment in a given country more attractive to foreign companies. I also test whether the combination of rule of law and FDI affect the estimated rate of GDP growth. The combination of these two effects would imply that FDI is more likely to create positive economic growth when applied to an economy with established legal institutions. Although the analysis does not fully support the effect of this rule of law—FDI interaction on growth, my analysis does suggest that FDI inflows are most efficient at promoting growth in countries with less legal development. / Thesis (BA) — Boston College, 2008. / Submitted to: Boston College. College of Arts and Sciences. / Discipline: Economics. / Discipline: College Honors Program. / Discipline: Economics Honors Program.
| Identifer | oai:union.ndltd.org:BOSTON/oai:dlib.bc.edu:bc-ir_102183 |
| Date | January 2008 |
| Creators | Danner, Tracy L |
| Publisher | Boston College |
| Source Sets | Boston College |
| Language | English |
| Detected Language | English |
| Type | Text, thesis |
| Format | electronic, application/pdf |
| Rights | Copyright is held by the author, with all rights reserved, unless otherwise noted. |
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