Abstract
Freedom of Information (FOI) laws, which guarantee access to government information, have been hailed for strengthening democratic accountability. By 2008 they had been passed by over seventy countries, including over forty in the developing world. This paper finds that FOI laws also have an economic impact, increasing FDI inflows in developing countries. FOI laws can impact FDI by leading to increased transparency and greater policy credibility. Using a panel study of developing countries from 1985 to 2008, I find that FOI laws increase FDI inflows, but only once in effect for three or more years. I also find that existing institutional quality is an important scope condition: the effect of FOI laws holds only where the rule of law is high. Instrumental variables models confirm the results are not an artifact of endogeneity. These results show that transparency and access to information can have an impact on economic outcomes.
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