Work

Democracy and FDI

Year: 2003

Type: article

Abstract: 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 FDI flowed to countries with repressive regimes.

Source: AgEcon Search (University of Minnesota, USA)

DOI: 10.22004/ag.econ.26260

Authors: Busse, Matthias, Busse, Matthias

Institution: Ruhr University Bochum

Language: English

Topic: International Business and FDI

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: green

OpenAlex ID: W1588393720

FWCI: 10.4

Cites: 25

Cited by: 47

Related to: 10