Educated dictators attract more foreign direct investment

Abel François, Sophie Panel and Laurent Weill

Journal of Comparative Economics, 2020, vol. 48, issue 1, 37-55

Abstract: Since political risk is greater in dictatorships than in democracies, this paper investigates the hypothesis that foreign investors scrutinize public information on dictators to assess this risk. It checks whether foreign investors use five relevant dictators’ characteristics: age, political experience, education level, education in economics, and prior experience in business. The study is performed on a sample of 100 dictatorial countries from 1973 to 2008. We find that educated dictators are more attractive to foreign investors. We obtain strong evidence that greater educational attainment of the leader is associated with higher FDI. We also find evidence that the leader having tertiary education in economics and prior experience in business is associated with greater FDI. By contrast, the leader's age, and political experience have no relationship with FDI.

Keywords: Foreign direct investment; Dictatorships; Leader characteristics; Political risk (search for similar items in EconPapers)
JEL-codes: F21 F23 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:48:y:2020:i:1:p:37-55

DOI: 10.1016/j.jce.2019.11.006

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