The effect of Myanmar’s foreign investment policies on FDI inflows: An analysis of panel data across ASEAN member countries

Abstract

Once one of the richest countries in Southeast Asia, Myanmar suffered the effects of a closed economy for over 50 years and became one of the poorest and most corrupt countries in the world. Though excited international investors wait to exploit Myanmar’s large labor force and natural resources as it reopens its markets, the country is currently far behind its potential. In such a small economy, large FDI inflows could have a significant impact on the country’s path going forward. Whether or not it receives these inflows depends on how multinational enterprises view Myanmar’s investment environment. In particular, its recently enacted foreign investment law as well as the status of sanctions on the country. By looking at a cross-section of ASEAN-member countries for the period 1995-2011, this paper analyzes the effect of foreign investment policies on FDI flows using a panel fixed-effects regression.