Economic freedom and foreign direct investment: New global overview

This paper investigates the connection and impact of economic freedom, measured by the index of economic freedom, on the inflow of foreign direct investments in developing countries. The research problem is sublimated by the question of whether variations in economic freedom affect the inflow of foreign direct investments. The panel analysis was conducted on a sample of 40 developing countries in the period 2005-2023. The research results showed that 8 components of the Economic Freedom Index have a statistically significant impact on foreign direct investment inflows, while the impact of the 2 components is irrelevant. In this way, the research hypothesis was confirmed that the higher degree of economic freedom has a significant and positive impact on the inflow of foreign direct investments ceteris paribus. The contribution of the research is reflected in the wide geographical and temporal scope, as well as the choice of analytical tool, in order to obtain conclusions with a higher degree of accuracy and reliability.