1. A Clear Advantage: The Benefits of Transparency to Foreign Direct Investment By Elaine Shen and Mike Sliwinski

2. The Story of Vietnam

3. A Link Between Transparency and FDI  Our research question: How does a country’s transparency influence the amount of FDI a country receives?  Our hypothesis: increased transparency has a positive correlation to FDI  Variables: HRV Index and FDI data  Methodology: STATA regression analysis  Results: confirm our hypothesis  Conclusion: increasing transparency increases FDI

4. Hypothesis  Research Question: Does a country’s level of transparency affect the amount of FDI it receives?  Yes!  Strong positive relationship

5. Factors Independent Variable (x)  Transparency Freedom House/Heritage Foundation, newspaper circulation, fraction of WDI reported The HRV Index Dependent Variable (y)  Foreign Aid  GDP per capita  Foreign Direct Investment (BOP, constant USD)

6. Methodology: Regressions  Controls Country fixed effects Inflation (CPI) GDP growth rate (annual % change) Exports (% GDP) Imports (%GDP) Interest rate Exchange rate  Lag Transparency  “Diff and diff” method

7. Greater transparency leads to greater FDI Results:

8. Figure 1: Transparency and FDI (linear best fit)

9. Figure 2: Transparency and FDI (linear prediction with error bars)

10. Table 1: Results Table 1 The Effect of Transparency on Foreign Direct Investment (BOP, millions of constant USD) Variable (1) (2) (3) (4) (5) Transparency (HRV Index) 1790.500*** 1693.116*** 1227.327*** 1262.701*** 1263.859*** (437.250) (461.568) (466.394) (483.144) (483.666) Inflation (CPI) -147.566 -57.729 -73.528 -74.169 (146.894) (146.432) (164.924) (165.182) GDP growth (annual %) -1041.357*** -1050.706*** -1052.716*** (216.320) (223.164) (224.273) Exports (%GDP) -30.741 -32.777 (25.907) (33.177) Imports (%GDP) 4.361 (44.338) Constant -2332.838** -1206.874 3286.166* 4573.874** 4475.417* (958.456) (1446.541) (1709.490) (2118.250) (2344.338) Number of observations 680 662 658 638 Adj. R-squared 0.02 0.06 0.05 Notes: Standard errors in parentheses. *** indicates significance at the one percent level, ** at the five percent level, and * at the ten percent level.

11. Conclusion  Increased transparency is positively correlated to increased FDI  Causal Logic: the benefits of increased information  Further research GDP per capita Foreign aid Instrumental variables  Significance: policy suggestions