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When FDI Flows from Rich to Poor Countries: Do democracy and economic reform matter? CEPS Working Document, No. 251, 12 October 2006

Sarisoy Guerin, Selen, and Manzocchi, Stefano. (2006) When FDI Flows from Rich to Poor Countries: Do democracy and economic reform matter? CEPS Working Document, No. 251, 12 October 2006. [Working Paper]

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    Abstract

    Foreign direct investment (FDI) is an instrument of international capital flow and it also shares some features of international trade flows as it is often associated with intra-firm trade by multinational corporations. Combining features from both ‘growth-type’ and ‘gravity-type’ models, we argue that democracy and economic reform in emerging economies have a joint positive impact on FDI inflows from advanced countries. This effect of democracy and economic reform is robust even when the EU membership negotiations are taken into account. We conclude that the role of democracy and market-oriented reform is robust and widespread beyond European borders. On the other hand, our results can be interpreted as evidence that prospects of joining the EU acts as an anchor for the host country.

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    Item Type: Working Paper
    Subjects for non-EU documents: EU policies and themes > External relations > human rights & democracy initiatives
    EU policies and themes > External relations > international trade
    Subjects for EU documents: UNSPECIFIED
    EU Series: UNSPECIFIED
    ["eprint_fieldname_eusries" not defined]: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Centre for European Policy Studies (Brussels) > CEPS Working Documents
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 27 Jan 2008
    Page Range: p. 23
    Last Modified: 06 Apr 2012 12:09
    URI: http://aei.pitt.edu/id/eprint/7375

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