Political Instability and Foreign Direct Investment: The Motor Vehicle Industry, 1948-65

Bollen, Kenneth A.; Jones, Scott T.

doi:10.2307/2577878

Cited by 10 publications

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“…For example, there is a negative influence of political unrest and riots in Latin American countries on investment by U.S. firms (Fatehi‐Sedeh & Safizadeh, 1988). Similar results have been found in studies on the effects of various political risks at macro‐ and microlevels on FDI (Robock, 1971) and the effect of political instability and policy uncertainties on FDI (Bollen & Jones, 1982; Chen, Senga, Sun, & Zhang, 2016). Furthermore, Staats and Biglaiser (2012) argue that compliance with law has a positive influence on FDI inflows and that a high level of political stability increases FDI.…”

Section: Literature Reviewsupporting

confidence: 83%

South Korea’s outward direct investment and its dyadic determinants: Foreign aid, bilateral treaty and economic diplomacy

Park

Jung

2020

World Economy

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This study investigates the factors that affect South Korean outward foreign direct investment (FDI) in developing countries. Most previous studies focus on monadic factors and do not consider how and to what extent bilateral relationships between South Korea and the host countries affect the investment decisions of Korean firms. The current study finds that interstate factors such as South Korea's international investment treaties with and official development assistance to host countries have positive effects on FDI to these countries, while presidential visits have strong and statistically significant effects on FDI only in countries located in non‐Asian regions, especially the African continent. The findings suggest that the effects of bilateral relations on South Korea's FDI vary depending on the geographic location of the host country.

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Section: Literature Reviewsupporting

confidence: 83%

South Korea’s outward direct investment and its dyadic determinants: Foreign aid, bilateral treaty and economic diplomacy

Park

Jung

2020

World Economy

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“…Commitment theory also comes into play in the form of an agreement between all political participants, backed by the courts, to continue playing the democratic game rather than defect to extra‐legal regime change and/or potentially unstable authoritarian rule (Ginsburg 2003:73, 78). Thus, strong courts contribute to political stability, which, in turn, encourages FDI by providing a climate of predictability for investors (Rummel and Heenan 1978; Bollen and Jones 1982; Crenshaw 1991).…”

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confidence: 99%

Foreign Direct Investment in Latin America: The Importance of Judicial Strength and Rule of Law1

Staats¹,

Biglaiser²

2011

International Studies Quarterly

116

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An extensive literature has emerged recently that investigates the determinants of foreign direct investment (FDI) in developing regions of the world, including Latin America. Much of this work has focused on whether authoritarian or democratic rule is better for attracting FDI. Curiously, little attention has been devoted to unpacking regime type to see whether specific political institutional variables related to judicial strength and adherence to the rule of law are important FDI determinants. Based on panel data analysis and our own survey of US corporations, we find that judicial strength and rule of law elements are important determinants of FDI in Latin America.For years, scholars have remarked on the importance of quality courts and rule of law for attracting foreign direct investment (FDI)

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“…From a political standpoint, effective legal institutions encourage fairness and transparency that are beneficial for promoting political stability. From an economic perspective, beyond the possible financial advantages that political stability brings for attracting capital flows (Crenshaw, 1991; Bollen and Jones, 1982; Rummel and Heenan, 1978), developing countries also ought to recognize the economic benefits of effective legal institutions for reputation building, a key insight from Tomz's (2007) research. The results also complement Mosley's (2002) work, which suggests that developing countries have to compromise policy autonomy in order to raise international finance.…”

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The Effects of Judicial Strength and Rule of Law on Portfolio Investment in the Developing World^*

Staats¹,

Biglaiser²

2011

Social Science Quarterly

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Objective. Applying existing theories relating to investment risk, this article examines the effects of judicial strength and adherence to the rule of law on portfolio investment in the developing world. We aim to demonstrate that countries with higher levels of judicial strength and rule of law are more able to attract portfolio investment because they provide greater protection of property rights and a better risk environment for investors. Methods. Using time-series data for 79 developing countries for the period 1996-2005, we employ panel-corrected standard errors multivariate regressions to demonstrate that higher levels of judicial strength and rule of law are associated with higher levels of portfolio investment. Results. We find that a one standard deviation increase in overall judicial strength and rule of law results in more than a 50 percent increase in portfolio investment. In separate analyses, we show that a one standard deviation increase in specific measures of judicial independence, impartial courts, and protection of property rights leads to increases in portfolio investment ranging from 27 percent to 184 percent. Conclusion. Judicial strength and adherence to the rule of law are important determinants of portfolio investment in the developing world.The past two decades have witnessed the parallel revival of both democracy and foreign investment in the developing world, a convergence that has led many political economy scholars to argue that democratic reform is a causal agent for increased foreign investment flows into developing countries

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Political Instability and Foreign Direct Investment: The Motor Vehicle Industry, 1948-65

Cited by 10 publications

References 0 publications

South Korea’s outward direct investment and its dyadic determinants: Foreign aid, bilateral treaty and economic diplomacy

South Korea’s outward direct investment and its dyadic determinants: Foreign aid, bilateral treaty and economic diplomacy

Foreign Direct Investment in Latin America: The Importance of Judicial Strength and Rule of Law1

The Effects of Judicial Strength and Rule of Law on Portfolio Investment in the Developing World^*

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Political Instability and Foreign Direct Investment: The Motor Vehicle Industry, 1948-65

Cited by 10 publications

References 0 publications

South Korea’s outward direct investment and its dyadic determinants: Foreign aid, bilateral treaty and economic diplomacy

South Korea’s outward direct investment and its dyadic determinants: Foreign aid, bilateral treaty and economic diplomacy

Foreign Direct Investment in Latin America: The Importance of Judicial Strength and Rule of Law1

The Effects of Judicial Strength and Rule of Law on Portfolio Investment in the Developing World*

Contact Info

Product

Resources

About

The Effects of Judicial Strength and Rule of Law on Portfolio Investment in the Developing World^*