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Political Risk, Institutions and Foreign Direct Investment AgEcon
Busse, Matthias; Hefeker, Carsten.
The paper explores the linkages between political risk, institutions and foreign direct investment inflows. Using different econometric techniques for a data sample of 83 developing countries and the period 1984 to 2003, we identify those indicators that matter most for the activities of multinational corporations. Overall, 12 different indicators for political risk and institutions are employed in the empirical analysis. The results show that government stability, the absence of internal conflict and ethnic tensions, basic democratic rights and ensuring law and order are highly significant determinants of foreign investment inflows.
Tipo: Working or Discussion Paper Palavras-chave: Political Risk; Institutions; FDI; Multinational Corporations; Institutional and Behavioral Economics; Political Economy; C31; C 33; F21; F23.
Ano: 2005 URL: http://purl.umn.edu/26388
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Democracy and FDI AgEcon
Busse, Matthias.
Many believe that multinational enterprises insensitively ignore political rights and civil liberties in the countries of their investments. Frequently, non-governmental organisations accuse multinationals of fostering repressive regimes in developing countries and consider foreign direct investment (FDI) as a tool of exploitation. This paper tries to examine empirically the complex relationship between democracy and FDI in a systematic way, using cross-sectional and panel data analysis. The results indicate that - on average - investments by multinationals are significantly higher in democratic countries, thereby refuting the hypothesis that political repression fosters FDI. Yet this positive link does not hold for the 1970s, when a considerable share of...
Tipo: Working or Discussion Paper Palavras-chave: FDI; Democracy; Political Rights; Civil Liberties; Political Economy; C31; C 33; F21; F23.
Ano: 2003 URL: http://purl.umn.edu/26260
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