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ID139534
Title ProperForeign direct investment, commitment institutions, and time horizon
Other Title Information how some autocrats do better than others
LanguageENG
AuthorMoon, Chungshik
Summary / Abstract (Note)Why do some autocratic governments do better than others in attracting foreign direct investment (FDI)? The received wisdom holds that democracies enjoy advantages over autocracies when it comes to attracting FDI. But there exist autocratic countries that attract substantial amounts of FDI. For example, during the last two decades, about half of the top 20 non-OECD host countries are nondemocratic. Focusing on the role of commitment institutions by which host countries can commit their protection of foreign assets, I argue that autocrats with long time horizons can provide stronger institutions to protect property rights. This allows them to attract more FDI. Using an error correction model (EDM) covering autocratic countries from 1970 to 2008, I find evidence that strongly supports my argument. These findings suggest that what matters to foreign investors is not regime type per se but specific institutional features of the host country. Insofar as host countries provide sound institutions to protect foreign assets, they would be able to attract more foreign investment.
`In' analytical NoteInternational Studies Quarterly Vol. 59, No.2; Jun 2015: p.344–356
Journal SourceInternational Studies Quarterly Vol: 59 No 2
Key WordsForeign Direct Investment ;  Commitment Problems ;  Commitment Institutions ;  Time Horizon ;  EDM ;  Autocratic Countries


 
 
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