Human Rights Violations and Foreign Direct Investment Inflows in Southeast Asia

Foreign direct investment (FDI) is an essential factor for the development of countries, especially for developing countries. These developing countries aim to attract FDI, as much as possible. Therefore, it is interesting to look at which factors determine an increase or decrease in FDI inflows. The primary independent variable in this research is human rights violations. The main question asked is whether human rights violations affect FDI inflows in Southeast Asian countries. Especially in Southeast Asia, human rights are interesting because of the relatively poor record of countries there in this regard. If it is true that human rights do have an impact on FDI inflows, then there are incentives for local governments to improve their human rights record. This research compares the influence of the political determinant human rights with two other political/institutional determinants, the rule of law and democracy. It tests which political/institutional determinant has the most influence on FDI inflows. In order to investigate these relationships, quantitative research is used to analyse 15 Southeast Asian countries over the course of 15 years, from 2003 to 2017. This research uses a panel data analysis in STATA to answer the research question. This paper aims to test the relationship of these three independent variables on the dependent variable with the help of five control variables: market size, economic growth, inflation, trade openness and balance of payments. The results of this paper show that the expectations are not verified. According to this research, human rights do not affect foreign direct investment inflows. In addition, the other independent variables of this research, the rule of law and democracy, do not have a significant impact on foreign direct investment inflows in Southeast Asia either.