Abstract
Developing economies often impose restrictions on foreign direct investment (FDI). In recent years many developing economies liberalize external trade as well as FDI inflows. The economists have neglected the importance of government policies on economic performance until recently. This paper makes use of the panel data from different economies in order to provide a clearer picture on the FDI inflows. The results confirm that the governments are successful in absorbing foreign capital inflows through more liberal policies.
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