A number of studies have examined the determinants of foreign direct investments (FDI). Institutions can be seen as an immobile location advantage, which can influence FDI flows. The aim of this study is to summarise the empirical literature on the growing importance of institutions in FDI decisions, especially that of informal institutions. The study also suggests using another measure as a proxy for informal institutions when analyzing the impact of informal institutions on FDI.

Journal of Economic Literature (JEL) codes: E02, F02