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ID:
134515
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| Summary/Abstract |
What is the relationship between respect for labor rights and foreign direct investment (FDI)? This study explores this connection with an emphasis on the strategic role of governments in attracting FDI. We present a formal model demonstrating that governments can do so by setting the level of labor rights protection and, as a consequence, investors will choose to invest in the face of tough labor regulations or cease investing, anticipating that the costs of abiding by these regulations will be too high. The model also suggests that governments will have an incentive to implement labor regulations when enforcement costs are sufficiently low or the profits from investment are sufficiently high. Using data from developing countries across time, error correction models test the dynamic nature of these hypotheses and find support for them: strict labor laws tend to decrease inflow of FDI, but more FDI tends to encourage better labor practices.
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| 2 |
ID:
101689
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| Publication |
2010.
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| Summary/Abstract |
In 2002, the USA asked all countries to sign agreements exempting US citizens from prosecution by the International Criminal Court (ICC) and threatened economic sanctions if they refused. Some countries yielded to this pressure even after ratifying the ICC Statute, while others chose to honor their original commitments. Why were some countries more responsive to US influence than others? This article provides an explanation of state vulnerability to attempts of influence through the lens of economic sanctions. Assessing the success of sanctions is difficult because of the selection bias in the instances of the use of such strategies observed by the researcher. Since all countries were asked to sign such agreements, one can observe exactly which signed, whether sanctions were enforced, and how quickly countries responded to such pressure. Arguments about sources of influence - shared interests, economic and security dependence, and domestic politics - are tested using an original dataset collected on country decisions to sign bilateral immunity agreements (BIAs). The authors find support for some existing explanations, including relative power and the relationship of dependency, while previously held beliefs about alliance and security relationships appear to be less influential on decisions to ratify BIAs. These findings have implications for existing research programs on economic sanctions, international organizations, and power politics.
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