THE POLITICS OF FDI EXPROPRIATION

• 成果类型: Article
• 署名作者: Azzimonti, Marina
• 署名单位: State University of New York (SUNY) System; Stony Brook University
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12277
• 发表日期: 2018
• 页码: 479-510
• 关键词: Capital Flow; dynamic-analysis; poor countries; POLICY; INVESTMENT; GROWTH; rich; institutions; INEFFICIENCY; uncertainty

摘要

I examine the role of political instability and fractionalization as potential explanations for the lack of capital flows from rich countries to poor countries (i.e., the Lucas Paradox). Using panel data from 1984 to 2014, I document that (i) developed countries exhibit larger inflows of foreign direct investment (FDI), (ii) countries subject to high investment risk (IR) receive low FDI inflows, and (iii) IR is higher in fractionalized and politically unstable economies. These findings suggest a negative relationship between political instability and FDI through the IR channel. I inspect the theoretical mechanism using a dynamic political economy model of redistribution, wherein policymakers can expropriate resources from foreign investors. The proceeds are used to finance group-specific transfers to domestic workers but hinder economic growth by discouraging FDI. I show that the political equilibrium exhibits overexpropriation and underinvestment.