Political Risk, Institutions and Foreign Direct Investment

The paper explores the linkages between political risk, institutions and foreign direct investment inflows. Using different econometric techniques for a data sample of 83 developing countries and the period 1984 to 2003, we identify those indicators that matter most for the activities of multinational corporations. Overall, 12 different indicators for political risk and institutions are employed in the empirical analysis. The results show that government stability, the absence of internal conflict and ethnic tensions, basic democratic rights and ensuring law and order are highly significant determinants of foreign investment inflows.


Issue Date:
2005
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/26388
Total Pages:
28
JEL Codes:
C31; C 33; F21; F23
Series Statement:
HWWA Discussion Paper 315




 Record created 2017-04-01, last modified 2017-08-24

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