Modeling the Relationship Between Foreign Direct Investment, Business Regulation, and Economic Growth

The chapter examines the relationship between foreign direct investment (FDI), corporate regulation, and economic growth through an integrated conceptual framework. It highlights that FDI serves not only as a source of capital inflows but also as a catalyst for technology transfer, innovation diffusion, employment generation, and integration into global value chains. The study argues that the impact of FDI on economic growth significantly depends on the quality of corporate regulation and institutional governance. Drawing on neoclassical growth theory, endogenous growth theory, institutional theory, and the Eclectic Paradigm (OLI framework), the chapter develops a multidimensional model linking FDI, regulatory quality, and economic performance. It further examines the mediating roles of human capital development, trade openness, financial development, and technological advancement, while emphasizing the moderating influence of regulatory effectiveness for sustainable economic growth. It stresses policy adaptability and governance now.