Comparison of the Effects of Political Decisions in the United Nations General Assembly and Economic Decisions on the Attraction of Foreign Direct Investment in Developing Countries

Mohammadhossein Peyrovi (), Rahman Saadat () and SeyedKomeil Tayebi ()
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Mohammadhossein Peyrovi: Ph.D. Candidate in Economics, Semnan University, Semnan, Iran
Rahman Saadat: Associate Professor in Economics Dept. of Economics, Faculty of Economics Management and Administrative Sciences, Semnan University, Semnan, Iran
SeyedKomeil Tayebi: Professor, Department of Economics, University of Isfahan, Isfahan, Iran

Quarterly Journal of Applied Theories of Economics, 2024, vol. 11, issue 2, 35-62

Abstract: Due to the importance of foreign direct investment and its role in providing capital and technology for developing countries, and being a variable as a function of economic and political variables; it is necessary to compare the effects of these two categories of variables. This issue becomes important due to the imposition of sanctions against countries in the past years. This issue has been investigated in the current research using the variable of similarity of votes in international issues and the similarity of economic decisions (demand). In this regard, to calculate the similarity actions in foreign affairs, the sililarity of votes in the United Nations General Assembly and the Linder index have been used to evaluate the similarity in economic decision making. To make this comparison, the Gravity model and the Panel ARDL method have been used to explain the accumulation of foreign direct investment of Group 7 countries in some selected developing countries between 2006 and 2019. Estimating this model shows that these two variables significantly affect the attraction of foreign direct investment in the long term. In addition, the estimated coefficient for the vote similarity variable is larger than the estimated coefficient for the Linder index. Therefore, the similarity in foreign policy plays a more important role in attracting foreign direct investment. Thus, creating and promoting economic ties with neighboring countries can have positive effects on the attraction of foreign direct investment

Keywords: Foreign Direct Investment; United Nations General Assembly; Preferences; International Relations; Sanctions (search for similar items in EconPapers)
JEL-codes: D11 F21 F51 F59 (search for similar items in EconPapers)
Date: 2024
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