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Foreign Direct Investment and Democracy: A Robust Fixed Effects Approach to a Complex Relationship
Author(s) -
Desbordes Rodolphe,
Verardi Vincenzo
Publication year - 2017
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/1468-0106.12204
Subject(s) - foreign direct investment , outlier , democracy , estimator , economics , econometrics , investment (military) , macroeconomics , mathematics , political science , statistics , politics , law
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 in recent years. We find that democracy has generally a positive impact on foreign direct investment, once outliers are controlled for, but that this relationship is very specific to each host country's characteristics.