The political economy of FDI location : why don't political checks and balances and treaty constraints matter?

Although the risk of expropriation for foreign direct investment (FDI) has fallen substantially since the 1970s, political risk continues to be of concern to MNCs in many countries. I ask whether domestic political checks and balances and international legal instruments that aim to protect FDI enabl...

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Main Author: Walter, Andrew
Other Authors: S. Rajaratnam School of International Studies
Format: Working Paper
Published: 2009
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Online Access:https://hdl.handle.net/10356/90474
http://hdl.handle.net/10220/4439
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Institution: Nanyang Technological University
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spelling sg-ntu-dr.10356-904742020-11-01T08:49:56Z The political economy of FDI location : why don't political checks and balances and treaty constraints matter? Walter, Andrew S. Rajaratnam School of International Studies DRNTU::Social sciences::Economic development Although the risk of expropriation for foreign direct investment (FDI) has fallen substantially since the 1970s, political risk continues to be of concern to MNCs in many countries. I ask whether domestic political checks and balances and international legal instruments that aim to protect FDI enable governments to commit credibly to avoid future policies that diminish the value of suck FDI. Utilizing a dataset on the level of foreign activity by majority-owned US manufacturing affiliates by country and industry over 1982-98. I find no evidence that either mechanism encourages inward FDI. Socio-political stability and centrist/technocratic governments do, however, provide positive signals to foreign investors, as many efficient domestic legal systems. Generally, MNCs also pursue various coping strategies that mitigate political and policy risk even in countries with few checks and balances and without investment treaty commitments. 2009-02-05T09:32:48Z 2019-12-06T17:48:21Z 2009-02-05T09:32:48Z 2019-12-06T17:48:21Z 2002 2002 Working Paper Walter, A. (2002). The political economy of FDI location : why don't political checks and balances and treaty constraints matter? (RSIS Working Paper, No. 38). Singapore: Nanyang Technological University. https://hdl.handle.net/10356/90474 http://hdl.handle.net/10220/4439 RSIS Working Papers ; 38/02 Nanyang Technological University 48 p. application/pdf
institution Nanyang Technological University
building NTU Library
continent Asia
country Singapore
Singapore
content_provider NTU Library
collection DR-NTU
topic DRNTU::Social sciences::Economic development
spellingShingle DRNTU::Social sciences::Economic development
Walter, Andrew
The political economy of FDI location : why don't political checks and balances and treaty constraints matter?
description Although the risk of expropriation for foreign direct investment (FDI) has fallen substantially since the 1970s, political risk continues to be of concern to MNCs in many countries. I ask whether domestic political checks and balances and international legal instruments that aim to protect FDI enable governments to commit credibly to avoid future policies that diminish the value of suck FDI. Utilizing a dataset on the level of foreign activity by majority-owned US manufacturing affiliates by country and industry over 1982-98. I find no evidence that either mechanism encourages inward FDI. Socio-political stability and centrist/technocratic governments do, however, provide positive signals to foreign investors, as many efficient domestic legal systems. Generally, MNCs also pursue various coping strategies that mitigate political and policy risk even in countries with few checks and balances and without investment treaty commitments.
author2 S. Rajaratnam School of International Studies
author_facet S. Rajaratnam School of International Studies
Walter, Andrew
format Working Paper
author Walter, Andrew
author_sort Walter, Andrew
title The political economy of FDI location : why don't political checks and balances and treaty constraints matter?
title_short The political economy of FDI location : why don't political checks and balances and treaty constraints matter?
title_full The political economy of FDI location : why don't political checks and balances and treaty constraints matter?
title_fullStr The political economy of FDI location : why don't political checks and balances and treaty constraints matter?
title_full_unstemmed The political economy of FDI location : why don't political checks and balances and treaty constraints matter?
title_sort political economy of fdi location : why don't political checks and balances and treaty constraints matter?
publishDate 2009
url https://hdl.handle.net/10356/90474
http://hdl.handle.net/10220/4439
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