Democracy, Foreign Direct Investment and Natural Resources

Elizabeth Asiedu and Donald Lien
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Donald Lien: Department of Economics, University of Texas, San Antonio

No 201009, WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS from University of Kansas, Department of Economics

Abstract: Existing studies assume that the impact of democracy on FDI is the same for re- source exporting and non-resource exporting countries. This paper examines whether natural resources alter the relationship between FDI and democracy. We estimate a linear dynamic panel-data model using data from 112 developing countries over the period 1982-2007, and we .nd that there is some critical value of the share of miner- als and oil in total exports below which democracy enhances FDI, and above which democracy reduces FDI. We identify 90 countries where an expansion of democracy may enhance FDI and 22 countries where an increase in democratization may reduce FDI.

Keywords: Democracy; Foreign Direct Investment; Natural Resources. (search for similar items in EconPapers)
JEL-codes: D72 F23 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2010-12
New Economics Papers: this item is included in nep-ene and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Journal Article: Democracy, foreign direct investment and natural resources (2011)
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