The purpose of the current study is to investigate the impact of institutional quality on inward foreign direct investment (IFDI) in Eurozone countries. Given that they have been through a serious financial crisis which affected, undoubtedly, their institutional framework and/or induced them to rethink it. Based on a panel data analysis, we examine 20 countries of Eurozone in a period of investigation which spans from 2000 to 2023.

We place particular emphasis on the impact of institutional variables; regulatory quality, voice and accountability, political stability, control of corruption, rule of law and government effectiveness in the first place. We then expand our interest to other institutional aspects such as Economic Freedom, to identify those that provide unique and valuable insights into the factors driving FDI.

The discussion on institutional effectiveness is not new; it is however, always important as geopolitical and economic forces reshape the institutional framework of countries, especially within the Eurozone, which entails single currency but still diverse economic perspectives and political minds.

JEL codes: F23, F3, E2