Foreign direct investment and democracy : a robust fixed effects approach to a complex relationship

Desbordes, Rodolphe and Verardi, Vincenzo (2017) Foreign direct investment and democracy : a robust fixed effects approach to a complex relationship. Pacific Economic Review, 22 (1). pp. 43-82. (https://doi.org/10.1111/1468-0106.12204)

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Abstract

We develop a new robust-to-outliers dummy estimator that we subsequently apply to investigate the impact of various democratic attributes on foreign direct investment (FDI) in recent years. We find that democracy has generally a positive impact on FDI, once outliers are controlled for, but that this relationship is very specific to each host country’s characteristics.

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