IDEAS home Printed from https://ideas.repec.org/a/taf/ginixx/v44y2018i3p582-602.html
   My bibliography  Save this article

Economic Policy, Political Constraints, and Foreign Direct Investment in Developing Countries

Author

Listed:
  • Tyson Roberts

Abstract

As foreign direct investment (FDI) has become increasingly important in the world economy, a large body of literature has emerged regarding the determinants of FDI flows. Some scholars argue that democracy attracts FDI through the mechanism of political constraints, which reduce the risk of negative policy changes. However, the value of policy stability should be conditional on the attractiveness of contemporary FDI-relevant policies. I therefore propose a theoretically more comprehensive argument: political constraints are attractive to investors when the host country policy environment is FDI-friendly, because these political constraints reduce the probability of negative policy changes in the future. When the policy environment is hostile to FDI, on the other hand, political constraints will have little positive effect, and, to the extent they indicate that FDI-relevant policies are unlikely to improve, may even deter FDI. This argument helps explain why the positive relationship between democracy and FDI seems to emerge after a global shift toward FDI-friendly polices. I find robust empirical support for the argument in tests covering more than 100 developing countries from 1970 to 2014, indicating significant effects using a variety of policy and political constraint measures.

Suggested Citation

  • Tyson Roberts, 2018. "Economic Policy, Political Constraints, and Foreign Direct Investment in Developing Countries," International Interactions, Taylor & Francis Journals, vol. 44(3), pages 582-602, May.
  • Handle: RePEc:taf:ginixx:v:44:y:2018:i:3:p:582-602
    DOI: 10.1080/03050629.2018.1448806
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/03050629.2018.1448806
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/03050629.2018.1448806?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Libman, Alexander & Stone, Randall W. & Vinokurov, Evgeny, 2022. "Russian power and the state-owned enterprise," European Journal of Political Economy, Elsevier, vol. 73(C).
    2. Jonas Gamso & Robert Grosse, 2021. "Trade agreement depth, foreign direct investment, and the moderating role of property rights," Journal of International Business Policy, Palgrave Macmillan, vol. 4(2), pages 308-325, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:ginixx:v:44:y:2018:i:3:p:582-602. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/GINI20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.