The Relevance of Human Capital & Rule of Law on Foreign Direct Investment in Muslim Countries

Abstract

The objective of this study is to analyze the relevance of human capital and also to identify government policies related to the rule of law that can increase attractiveness OIC countries as an FDI location. The estimated significant on the variables of labor force participation rate & secondary enrollment ratio implies that the human capital is still relevance in attracting FDI in OIC countries. In the case of this study, the rule of law has a significant negative effect on attracting FDI in OIC countries. It implies that under the weak rule of law, a state is still able to attract FDI because the investors can use personal relationships with business partners and government connections to reduce the uncertainty created by the weak rule of law. Finally, the economic opportunity may outweigh the potential risks associated with a weak rule of law

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