E-GOVERNMENT, POLITICAL STABILITY, AND FOREIGN DIRECT INVESTMENT IN ASEAN

Abstract

The growing importance of digitalization and institutional quality in the global business environment has introduced new determinants of foreign direct investment (FDI) alongside traditional economic factors. The implementation of a global minimum corporate tax has increased the relevance of non-tax incentives in attracting FDI. This study examines the impact of e-government development and political stability on FDI inflows in the Association of Southeast Asian Nations (ASEAN). Using a fixed-effects estimator on panel data from 2003 to 2020 for ten ASEAN member states, the results indicate that both e-government development and political stability have statistically significant and positive effects on FDI inflows. The findings remain robust across alternative model specifications and adjustments for heteroskedasticity and crosssectional dependence. Expanding the analysis to a global sample of 161 countries confirms the persistent positive influence of political stability on FDI, emphasizing the critical role of stable political environments in facilitating international investment. This study contributes to the FDI literature by highlighting the importance of public sector digitalization and institutional quality in enhancing the investment attractiveness of host countries, particularly in the ASEAN region.