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Is FDI doing good? A golden rule for FDI ethics

Jordi Paniagua () and Juan Sapena ()

Journal of Business Research, 2014, vol. 67, issue 5, 807-812

Abstract: Ethical and economic perspectives on foreign direct investment (FDI) often appear in opposing frameworks. To combat this antagonism, this research proposes a consolidation between foreign private wealth and general welfare in host countries. The first contribution of this study is to provide a comprehensive conceptual approach to the study of FDI ethics. The second key contribution is to present empirical analysis of the differential influence of the level of democratic rights on foreign employment, new projects, and FDI capital flows. Results suggest that FDI incentivizes general welfare in least developed countries with high degrees of volatility. Additionally, policymakers face a dilemma in which democracy and legal rights seem to be mutually incompatible with fostering foreign employment. Practitioners find a way to evaluate the ethical implications of international business activities. The study analyzes FDI data from 161 countries between 2003 and 2010 by means of the FDI gravity equation.

Keywords: Ethics; International business; Foreign direct investment; Gravity equation; Democracy; Legal rights; Employment (search for similar items in EconPapers)
Date: 2014
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