Relationship between Doing Business Index and Foreign Direct Investment

The importance of Doing Business Index indicators as a determinant of FDI has glimmered attention in determining their relationships. The present study intended to explore the relationships between Doing Business indexes and FDI. The study investigates the relationship between the foreign direct investment and six variables of doing business index of World Bank by using Johansen's co-integration test, and Granger causality test. The Johansen's co-integration test suggests that all the series under the study are found to be co-integrated of order one, indicating that there is a stable long-run equilibrium relationship in these series suggesting that the FDI has been co-integrated with the six variables under the study. The findings from Granger causality test suggest that all the six variables under the study of doing business index of World Bank does not Granger cause foreign direct investment in short run, however form the Johansen test of co-integration, it can be concluded that there is a long run relationship between the FDI and variables under the study