Biglaiser and DeRouen (2007)- Following the Flag- Troop Deployment and US FDI

Biglaiser and DeRouen (2007)- Following the Flag- Troop Deployment and US FDI

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Following the Flag: Troop Deployment and U.S. Foreign Direct Investment By: Glen Biglaiser and Karl DeRouen Jr. (2007) Biglaiser, Glen, and Karl DeRouen Jr. 2007. “Following the Flag: Troop Deployment and U.S. Foreign Direct Investment.” International Studies Quarterly. 51: 835-854. Abstract: In contrast to the 19 th and early 20 th centuries, the effects of security factors on FDI have received limited interests in the post-Cold War Era. Using panel data for the 126 developing countries between 1966 and 2002, and controlling for macroeconomic conditions, economic reforms, and level of democratization, this essay tests the effects of “follow the flag” variables on US FDI. Security factors can affect FDI in two stages: the initial decision over whether to invest and the second stage, which involves the amount invested. Our results indicate a selection effect and that follow the flag variables are influential both in the selection phase and in the main equation for US investors. However, such results are not found for global investors, suggesting that positive links between economic and security goals only hold for US firms. 1. Question: a. Why does US FDI inflows increase in states with US troops present? 2. Novel Approach: a. Suggest that FDI follows the US military 3. Theoretical Perspective: a. Neorealist? 4. Theory: a. Private corporations now supply US troops in the field, thus providing incentive to follow troops (Outsourcing Military Functions) b. Contracts to supply US military are largely not bid upon, meaning large rents for those firms that are willing to supply the logistic chain
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Biglaiser and DeRouen (2007)- Following the Flag- Troop Deployment and US FDI

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