When FDI Flows from Rich to Poor Countries Do Democracy and Economic Reform Matter?

Manzocchi, Stefano and Salisoy Guerin, Selen (2006) When FDI Flows from Rich to Poor Countries Do Democracy and Economic Reform Matter? [Working Paper]. LLEE, Roma. p. 23. ISBN 92-9079-670-7.

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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.

Item Type: Report / Paper (Working Paper)
Research documents and activity classification: Working Papers > Non-Refereed Working Papers / of national relevance only
Divisions: Department of Economics and Finance > LLEE (Luiss Lab of European Economics)
Uncontrolled Keywords: Democracy. Foreign direct investment. Sviluppo economico. Investimenti. Economia.
MIUR Scientific Area: Area 13 - Economics and Statistics > SECS-P/01 Political Economy
Deposited by: Silvia Capobianchi
Date Deposited: 03 Jul 2009 06:43
Last Modified: 21 Apr 2015 23:10
URI: http://eprints.luiss.it/id/eprint/98


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