KEY DETERMINANTS OF INVESTMENT FLOW AND FISCAL HEALTH FOR DATA-DRIVEN POLICY DECISIONS AND INFORMATION RETRIEVAL
DOI:
https://doi.org/10.5281/zenodo.17403547Keywords:
Investment Flow, Fiscal Health, Structural Equation Modeling (SEM), Trade Freedom, Judicial Effectiveness, Foreign Direct Investment (FDI), Digital Economy and PolicyAbstract
Investment flow and fscal health represent critical indicators of a region’s fnancial and economic stability,
shaped by multiple macroeconomic factors. In recent years, data-driven policy decisions have become a cornerstone
of economic governance, leveraging structural equation modeling (SEM) to enhance policy effectiveness and optimize
information retrieval.
This study examines the key determinants of investment flow and fscal health using empirical data from multiple regions
to inform policy formulation. We employ SEM as an analytical framework to explore relationships among economic
indicators, providing a comprehensive understanding of their interactions. Our analysis delves into the dynamics between
trade freedom, foreign direct investment (FDI) flows, tax burden, and other exogenous factors affecting fscal health.
Mechanism test results reveal that investment freedom positively impacts fscal health by facilitating capital movement.
Additionally, an extended analysis of tax burden indicates that higher tax burdens negatively influence investment freedom,
with broader implications for sustainable economic growth. The fndings highlight that judicial effectiveness and fscal
health play pivotal roles in shaping investment dynamics, thereby contributing to more refned fscal policy strategies.
Moreover, the analysis identifes inefciencies in current fscal health metrics, which fail to fully capture investment
incentives. By applying SEM to this analytical framework, researchers can derive actionable insights for policy adjustments.
The results of this study not only enhance the understanding of investment and fscal dynamics but also provide empirical
evidence to support data-informed policy recommendations.
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