This paper investigates the impact of restrictive capital policy on foreign direct investment. During twentieth century and onwards most of the developing countries and commonly the Asian countries had at least one or more capital control policy in place. Thus, a thorough analysis of the impact of such restrictions bears significant importance, especially in the determination of foreign capital flow. The main objective of this paper is to identify the impact that these capital control policies have on the foreign capital flow in the Asian countries. The analysis is pursued with the data from 16 developing countries of Asia for the period 2000-2017. Quantitative results are obtained using a fixed-effect regression with the inclusion of several economic indicators. The results suggest that, during this period, freeing restrictions from export proceeds, liberalisation of personal capital account transactions and removal of control on the liquidation of foreign capital significantly increased the flow of foreign direct investment into these Asian countries.

DOI: https://doi.org/10.57138/CYUO3889

Date of Publication 

December 2019

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Recommended Citation

Ibrahim, R. (2018). Impact of Capital Controls on Foreign Direct Investment in Asia. The Bangladesh Development Studies, 41(4), 57-77. https://doi.org/10.57138/CYUO3889