The role of institutional quality in attracting foreign direct investment.

Foreign direct investment is one of the most prominent landmarks in the global economy, as most multinational companies have expanded to direct their foreign direct investments to developing and developed countries, which prompted a campaign of economists to reveal the factors that attract foreign direct investment by studying several economic determinants and providing an economic environment with international standards in order to increase the volume of foreign direct investment flows, represented in the size of the market, the abundance of natural resources, economic growth, and others. But recent studies have shown that these determinants alone are no longer sufficient to explain the attractiveness of countries to foreign direct investment. Many researchers focused on the importance of institutional determinants, as the presence of good quality and effective institutions is considered as a factor that explains the difference in the attractiveness of investments between countries due to the laws they offer characterized by clarity, transparency, ensuring the protection of property rights, reducing the costs of transactions and the absence of corruption, all of which allow the creation of an investment climate and the freedom of activity of transnational companies, as institutional quality is an important factor in facilitating the work of foreign investors as well as providing stability of investment projects.