Political Regime and Vertical vs. Horizontal FDI

Manzocchi, Stefano and Salisoy Guerin, Selen (2006) Political Regime and Vertical vs. Horizontal FDI. [Working Paper]. LLEE, Roma. p. 32.

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We introduce the effect of the political regime in a model of North-South bilateral foreign direct investment (FDI), and test whether it matters for the nature of FDI inflows to emerging markets. Alternative political regimes in the host country may affect the incentive for foreign investors to implement horizontal rather than vertical FDI, if the political expropriation risk is different for the two kinds of investment. We test the model in a panel of 14 source countries and 24 host countries over 1992-2004, and find that autocracies are likely to receive relatively more FDI of the vertical type, while democracies are more likely to be associated with horizontal FDI inflows.

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. Political regime. FDI. Expropriation. Democrazia. Investimenti.
MIUR Scientific Area: Area 13 - Economics and Statistics > SECS-P/01 Political Economy
Deposited by: Silvia Capobianchi
Date Deposited: 03 Jul 2009 07:29
Last Modified: 21 Apr 2015 23:10
URI: http://eprints.luiss.it/id/eprint/99


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