AN EMPIRICAL ANALYSIS: HOW FORCED LOCALIZATION IN THE ICT SECTOR DISRUPT FOREIGN DIRECT INVESTMENT
Wise, Andrew S
The ICT sector has been recognized as a major driving force of foreign direct investment in the global economy. Past studies have demonstrated the merit of ICT infrastructures and governance in attracting foreign direct investment inflows. The emergence of forced localization policies targeting the ICT sectors prompted me to conduct this study to investigate its impact on FDI.I compiled two econometric model with relevant data to study the relationship betweenforced localization policy and foreign direct investment. Through quantitative analysis of the datasets, I find that forced localization policy in the ICTsector discourages foreign direct investment severely. Meanwhile, I found an inconsistent but significant impact of ICT infrastructure on foreign direct investment inflow. However, the analysis does not find a significant effect of quality of local governance on foreign direct investment inflow. My findings suggest that forced localization policy in the ICT sector heavily disrupt the current global investment regime and recommend government to engage in meaningful dialogue to address relevant issues in lieu of adapting such policy
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