Jensen (2003)- Democratic Governance and Multinational Corporations- Political Regimes and Inflows o

Jensen (2003)- Democratic Governance and Multinational Corporations- Political Regimes and Inflows o

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Democratic Governance and Multinational Corporations: Political Regimes and Inflows of Foreign Direct Investment By: Nathan M. Jensen (2003) Jensen, Nathan M. 2003. “Democratic Governance and Multinational Corporations: Political Regimes and Inflows of Foreign Direct Investment.” International Organization. 57(Summer): 587-616. 1. Question : a. How does regime type affect the risk associated with FDI? How does regime type affect the amount of FDI a state can attract? 2. Novel Approach : a. Numerous statistical analyses used to refute the suggestion that authoritarian regimes promote FDI 3. Theoretical Perspective : a. Neolib b. John Dunning’s OLI framework b.i. Ownership b.ii. Location b.iii. Internalization c. Democratic Credibility d. Audience Costs 4. Theory: a. Democratic Governance allows for greater guarantee that sunk investments will not be expropriated, thus leading to greater FDI, because internalization of production is less risky under democratic regimes 5. Methods : a. Cross-Sectional: “…estimate the effect of economic conditions, policy decisions, and democratic political institutions in the 1980’s on the level of FDI inflows in the 1990’s/” b. Panel Regression: “. ..explore how changes in economic policies and political institutions affect changes in FDI inflows in the period 1970- 1997. c. Heckman Selection Model: “…explore the robustness of the relationship between democratic governance and FDI.” 6. Findings : a. Finds that democracy and democratic institutions INCREASE FDI inflows by as much as 70%, ceteris paribus b. “…democratic systems are associated with higher country credit ratings.” 596 7. Critiques and Questions : a. New Capital Control Variable: 1-9 ordinal scale rather than the Dummy used in the prior model Why change the variable mid-paper? This
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seems suspect…Was there just a lack of significance in the ordinal scale version in the 1 st model? b. “…private capital flows from a parent firm to a location outside of the parent firm’s home nation….[and] large enough to give the parent firm some amount of control over the management of the enterprise.” 588 What about Territories and Colonial Holdings? Are states with past
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This note was uploaded on 02/03/2012 for the course POLS 5308 taught by Professor Biglaiser during the Spring '11 term at Texas Tech.

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Jensen (2003)- Democratic Governance and Multinational Corporations- Political Regimes and Inflows o

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