Political Risk, Institutions and Foreign Direct Investment

Matthias Busse and Carsten Hefeker

No 26388, Discussion Paper Series from Hamburg Institute of International Economics

Abstract: The paper explores the linkages between political risk, institutions and foreign direct investment inflows. Using different econometric techniques for a data sample of 83 developing countries and the period 1984 to 2003, we identify those indicators that matter most for the activities of multinational corporations. Overall, 12 different indicators for political risk and institutions are employed in the empirical analysis. The results show that government stability, the absence of internal conflict and ethnic tensions, basic democratic rights and ensuring law and order are highly significant determinants of foreign investment inflows.

Keywords: Institutional and Behavioral Economics; Political Economy (search for similar items in EconPapers)
Pages: 28
Date: 2005
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Citations: View citations in EconPapers (40)

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Related works:
Journal Article: Political risk, institutions and foreign direct investment (2007)
Working Paper: Political Risk, Institutions and Foreign Direct Investment (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:hwwadp:26388

DOI: 10.22004/ag.econ.26388

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