The impact of E-Government on FDI Inflows: Heterogeneous Effects across Income Groups

This study examines the relationship between foreign direct investment (FDI) inflows and the individual components of the E-Government Development Index (EGDI) through panel regression analysis of data from 166 countries from 2002 to 2023. The analysis reveals that more substantial human capital plays a key role in attracting FDI globally. In countries with low, lower-middle income, and upper-middle income economies, FDI is mainly influenced by trade openness and GDP growth rather than EGDI components. However, in high income countries, both the Online Service Index (OSI) and the Human Capital Index (HCI) show a substantial positive impact on FDI. It illustrates the attractiveness of the developed economies with enhanced digital services and skilled workforces to the foreign investors. Consequently, each country's development stage should be considered in policy strategies, where the special attention should be paid into the improvement of the human capital and enhancement of the digital infrastructure and services.

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