Article2009

Do Political Institutions Affect Foreign Direct Investment? A Survey of U.S. Corporations in Latin America

116 citations0/0 files storedPolitical Research Quarterly

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International Business and FDI Corruption and Economic Development Political Influence and Corporate Strategies

Abstract

The political economy literature investigates the determinants of foreign direct investment (FDI) based largely on aggregate data, ignoring the actual decision makers. The authors conduct a survey of U.S. chief executive officers— the actual decision makers—of corporations that have investments in Latin America to understand FDI inflows. The authors find that investment risk related to property-rights protection, adherence to rule of law, and an effective court system weighed most heavily in U.S. firm preferences. The results suggest that rather than stress democracy itself as a determining factor, researchers might better focus on the institutions found within democracies.

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References

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Cited by

2011The Effect of Sanctions on U.S. Foreign Direct Investment 2012Investment, Opportunity, and Risk: Do US Sanctions Deter or Encourage Global Investment?1 2013Governance and foreign direct investment in Latin America: A panel gravity model approach 2018Monopoly Rents and Foreign Direct Investment in Fixed Assets 2019Does good governance matter for FDI? New evidence from emerging countries using a static and dynamic panel gravity model approach 2015Significance of Good Governance for FDI Inflows in SAARC Countries

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