Institutional quality and FDI to the south: an analytical approach

Julia Darby, Rodolphe Desbordes, Ian Wooton

Research output: Chapter in Book/Report/Conference proceedingChapter


We ask whether MNEs' experience of institutional quality and political risk within their “home” business environments influences their decisions to enter a given country. We set out an explicit theoretical model that allows for the possibility that firms from South source countries may, by virtue of their experience with poor institutional quality, derive a competitive advantage over firms from North countries with respect to investing in destinations in the South. We show that the experience gained by such MNEs of poorer institutional environments may result in their being more prepared to invest in other countries with correspondingly weak institutions.
Original languageEnglish
Title of host publicationFirms in the International Economy
Subtitle of host publicationFirm Heterogeneity Meets International Business
EditorsS. Beugelsdijk, S. Brakman, J.H. Garretsen, H. van Ees
Place of PublicationCambridge MA, USA
Publication statusPublished - Dec 2013


  • institutional quality
  • FDI
  • MNE
  • business environment
  • foreign direct investment


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