Political Risk, Democratic Institutions, and Foreign Direct Investment

Jensen, Nathan M.

doi:10.1017/s0022381608081048

Cited by 387 publications

(269 citation statements)

References 45 publications

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“…Bold emphasis indicates that a variable is robust (otherwise it is fragile) based upon Sala-i-Martin's criteria. *** denotes robustness at the 0.99 level, ** at the 0.95 level and * at the 0.90 level tape (Jensen 2008 andLi 2009). 16 The internal and external conflict variable (CON-FLICTINT) is robust with a generally negative coefficient sign.…”

Section: Eba Using Economic Geographical and Political Variablesmentioning

confidence: 99%

Identifying the robust economic, geographical and political determinants of FDI: an Extreme Bounds Analysis

2016

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Understanding what determines Foreign Direct Investment (FDI) inflows remains a primary concern of economists and policy makers; yet the uncertainty surrounding FDI theories and empirical approaches has created ambiguity regarding the determinants of FDI. This paper applies Extreme Bounds Analysis to identify the robust determinants of FDI using panel data covering 168 countries from 1970 to 2006. We consider 58 potential economic, geographic and political determinants and find that almost one-third are robust, including: openness, education, government spending, corporate tax rate, infrastructure, experience of conflict, democratic governance, natural resources, geographic location, number of borders, coastal location and language.

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Section: Eba Using Economic Geographical and Political Variablesmentioning

confidence: 99%

Identifying the robust economic, geographical and political determinants of FDI: an Extreme Bounds Analysis

2016

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“…As Northern Ireland is a small regional geographic area it is anticipated that its foreign capital inflows may exhibit significant sensitivities to political instability, i.e. terrorist activity, due, in particular, to the possibly undiversified nature of its investor base (Enders, 1996;Enders and Sandler, 2004;Busse, 2007;and, Jensen, 2008). In addition, FDI is an avenue of technology transfer and savings which are key determinants of economic growth in small economies exhibiting budget deficits (Coe and Helpman, 1994).…”

Section: Introductionmentioning

confidence: 99%

Terrorism, Tourism and FDI: Estimating a Lower Bound on the Peace Dividend in Northern Ireland

Muckley

2010

SSRN Journal

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Abstract:In this article we estimate the economic cost of terrorism with regard to foreign direct investment and tourism in Northern Ireland during periods extending from 1970 through to 2007. Previous studies which have estimated the economic cost of terrorism internationally have neglected Northern Ireland. As a result, we focus exclusively on the economic cost of terrorism in Northern Ireland, which has been significant. In particular, our analyses indicate that for those initiatives reliant on foreign direct investment as well as for the tourism sector, a fatality as a result of terrorism imputes a minimum economic cost of £3.69 million pounds sterling. Taken together, our findings indicate an economic lower bound on the cost of terrorism in Northern Ireland.

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“…We account for potential correlations between cross-border bank lending and foreign direct investment by including the stock of US FDI in a country as a share of its GDP. We also account for a country's level of financial development, as countries with more developed financial systems should both attract more foreign capital and enjoy better economic performance (Jensen, 2008). To that end, we control for private credit by deposit money banks as a share of GDP.…”

Section: Regression Analysis Of the Market Response To The Electionmentioning

confidence: 99%

US Political Shocks, Global Banks, and International Financial Markets: Evidence from the 2016 Presidential Election

Cunha

Kern

2018

SSRN Journal

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What are the global financial spillovers from major political shocks in the United States? We analyze the response of international financial markets to the 2016 US presidential election. The surprise election outcome represents an exogenous shock that affords us a unique opportunity to estimate the effect of a partisan shift in the White House on third countries. Given Donald Trump's unanticipated victory and his promises of financial deregulation, investors revised their return expectations for third countries according to countries' exposure to the election shock. We argue that countries with dense financial ties to the US benefited from expectations of regulatory reform in Wall Street. We estimate the election effect on foreign equity markets using data on 134 single-country exchange-traded funds (ETFs) covering 48 developed and developing economies. Results show that the election had an overall negative effect on international markets, but countries with close ties to the US banking system fared better. We further test the mechanism with data on US global banks and find support for our hypothesis.

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Political Risk, Democratic Institutions, and Foreign Direct Investment

Cited by 387 publications

References 45 publications

Identifying the robust economic, geographical and political determinants of FDI: an Extreme Bounds Analysis

Identifying the robust economic, geographical and political determinants of FDI: an Extreme Bounds Analysis

Terrorism, Tourism and FDI: Estimating a Lower Bound on the Peace Dividend in Northern Ireland

US Political Shocks, Global Banks, and International Financial Markets: Evidence from the 2016 Presidential Election

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