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FDI, Poverty, and the Politics of Potable Water Access
Author(s) -
Rudra Nita,
Alkon Meir,
Joshi Siddharth
Publication year - 2018
Publication title -
economics and politics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.822
H-Index - 45
eISSN - 1468-0343
pISSN - 0954-1985
DOI - 10.1111/ecpo.12112
Subject(s) - foreign direct investment , multinational corporation , politics , poverty , potable water , intuition , water sector , business , political risk , natural resource economics , economics , economic growth , water supply , environmental engineering , political science , environmental science , philosophy , finance , epistemology , law , macroeconomics
How does foreign direct investment (FDI) affect the wellbeing of the poor? We address this question by analyzing the impacts of FDI on access to potable water. We predict that higher levels of greenfield FDI in water‐intensive sectors slow the rate of access to potable water in developing countries, with these adverse effects conditional on subnational politics. We hypothesize that this is more likely to occur in polities marked by relatively large poor and marginalized populations, where regulatory capture is more likely to occur. To test our intuition, we analyze subnational data on greenfield FDI in India, confirming that multinational investment in “thirsty” manufacturing sectors are negatively associated with improvements in potable water access. We then present a controlled comparison case study of two Indian states, Kerala and Rajasthan, highlighting the political mechanisms conditioning FDI's effects on potable water.