Is foreign direct investment good for the poor? A review and stocktake

Few issues in the development process raise as much heat as the role of the international private sector in the form of transnational corporations (TNCs) and foreign direct investment (FDI). This article reviews the most recent research on the impact of FDI on economic growth and poverty reduction in developing countries. A brief history of FDI is given. This is followed by discussion of the conceptual transmission mechanisms linking FDI, growth, and poverty. The available empirical evidence is then discussed. It is argued that it is not a question of whether FDI is good or bad for social and economic development, but that its impact is determined by the terms upon which FDI is accepted. Although overall the evidence on FDI, growth, and poverty is not conclusive, research has had a tendency to suggest that the benefits of FDI are linked to the FDI policy regime; and that the current orthodoxy of maintaining a highly liberal FDI policy regime leads to a situation whereby developing countries have a precarious trade-off to make between attracting FDI and maintaining policy instruments to extract the benefits of any inflows.     

Unilateral Versus Multilateral International Sanctions: A Public Choice Perspective

Multilateral economic sanctions can be expected to impose greaterterms-of-trade effects on a target nation than unilateral sanctions. Yet despite their potential for greater economic damage, multilateral sanctions often are less effective in bringing about desired political results in the target. An interest-group model of endogenous policy suggests that multilateral sanctions can undermine the political effectiveness of opposition groups in the targetcountry, or strengthen those groups supporting the objectionable policy of the ruling regime. Such perverse effects are due in part to the inability of multilateral coalitions to enforce cooperation among members, and to the appropriation of sanctions rents in the target country. Unilateral sanctions, however, imposed by a country with close ties to the target, are ofteneffective in achieving their intended political objectives.     

中日韩比较优势模式的变化特征及其启示

区域经济一体化和双边或多边FTA的建设和发展,是当前国际经济体系变革中的主要趋势之一。中日韩合作以及三国间双边、多边FTA建设,也是当前三国政界和学界探讨的重点和焦点课题。为此,有必要研究三国出口结构的变化,以及由此引起的比较优势模式的变化。基于中日韩三国的出口结构的变化,利用相关系数和显性比较优势指数RCA,可以系统考察三国间的比较优势模式变化的趋势及其特征。根据中日韩三国间的贸易特征,我国在制定相应对策时,应根据相关国家的政策倾向积极采取有针对性的政策及措施。     

Globalization and Domestic Trade Policy Preferences: Foreign Frames and Mass Support for Agriculture Subsidies

Reforming agriculture trade policy is key to breaking the deadlock in multilateral trade negotiations. While existing studies have focused on institutions and interest group barriers to agriculture trade reform in developed countries, most have failed to recognize the broad support for agriculture protection among developed countries. In this article we examine one of the drivers of this support: the ability of politicians to frame their own agriculture policies as less generous relative to those of other countries. Drawing on existing literature on heuristics, we argue that voters are malleable to politicians’ comparative framing of agriculture policies. Using an original survey experiment in the United States, we find that framing US agriculture as less generous than other countries generates an additional 12% of respondents supporting increased farm payments to US farmers. These results speak to the difficulty in reforming agriculture and more broadly about the lack of public support for unilateral trade liberalization.     

Improving Reputation BIT by BIT: Bilateral Investment Treaties and Foreign Accountability

The literature on foreign direct investment (FDI) has paid an increasing interest to international institutions such as bilateral investment treaties (BITs), but whether BITs help attract FDI is an unsettled question. Building on the existing literature, this article argues that BITs can change investors’ perceptions and the corresponding investment they make because signing BITs signals the involvement of another powerful country that is able to compel the host government to comply. This implies that the effect of BITs is not constant across signatory countries: BITs are more effective when they are signed with rich and influential countries. Using monadic and dyadic FDI data, this article finds that BITs signed with powerful countries (defined as the top six largest economies) lead to an increase in FDI inflows (both from these signatory countries and from other countries). BITs signed with other countries, despite in a larger quantity, have little influence on FDI inflows.     

Party systems in Latin America: institutionalization,decay, and collapse,edited by Scott Mainwaring

Although coming of age under a totalitarian regime drastically reduces the chances of acquiring democratic values or supporting democracy, factors other than the formal nature of the political regime shape political values as well. The informal structure of the political regime, which consists of rules developed in political practice and economic and human development, may shape individual values and attitudes and produce different attitudes towards democracy in different totalitarian regimes. This article focuses on the effect of early socialization on the support for democracy among citizens who have been ruled under two different non-democratic regimes. We compare the dynamics in Spain and Romania during the post-totalitarian period with the aim of identifying how coming of age operated in these two different totalitarian regimes and how each type of non-democratic regime affected the legitimacy of the new democratic rule. Using survey data from various sources (Standard Eurobarometer, Central and Eastern Eurobarometer and Candidate Countries Eurobarometer) that allow both longitudinal and cross-sectional comparisons, we decompose the social change in support for democracy over the post-totalitarian period in both countries using cross-classified fixed effects models. The analyses demonstrate the different effects of socialization on support for democracy in these two different totalitarian contexts.     

汇率及其波动与日本对华直接投资

日本是我国重要的贸易伙伴和外商直接投资来源国。影响日本企业对我国直接投资的因素可能有多种,本文拟从汇率因素切入,并以日本对华直接投资的事实数据和特征为背景,研究日元与人民币双边真实汇率对日本对华直接投资的影响。首先通过GARCH模型对双边真实汇率的波动进行测算,然后以此变量和真实汇率变量为基础,通过脉冲响应函数和方差分解技术,研究真实汇率水平及其波动对流入我国的日本FDI带来的影响。模型结果显示,双边真实汇率及其波动均对FDI产生了显著影响,而且该影响同理论预期相吻合,说明真实汇率是影响日本对华直接投资的重要因素,现阶段保持人民币汇率的相对稳定性有利于日本对华直接投资的增长。     

Public resistance to privatisation in water and energy

Since the 1990s, development agencies and international institutions have promoted private-sector involvement in infrastructure, assuming that this would inject both investment and efficiency into the under-performing public sector. In the water and energy sectors, these expectations have not been fulfilled. Private-sector investment in developing countries is falling, multinational companies have failed to make sustainable returns on their investments, and the process of privatisation in water and energy has proved widely unpopular and encountered strong political opposition. This paper examines the role of this opposition in delaying, cancelling, or reversing the privatisation of water and energy. Local civil society has successfully mobilised highly effective political activity, its opposition being based on the perceived conflicts between privatisation and equity, and over the role of the state and community in these sectors. Such opposition has involved dynamic interactions with existing political parties and structures, including the use of existing electoral and judicial mechanisms. Its success poses challenges for the multilateral and donor community, NGOs, the opposition campaigns themselves, and the future of national systems of electricity and water.     

Foreign direct investment and the risk of regime transition in autocracies

Economic globalization and, in particular, foreign direct investment (FDI) have often been considered to be catalysts for economic reform and political liberalization. It is argued that openness to foreign investment spurs democratization by empowering pro-liberalization actors and undermining elite cohesion. This article explores and tests three alternative hypotheses linking FDI and autocratic regime survival. The liberalization hypothesis claims that FDI promotes democratization. The state-capture hypothesis suggests that FDI, by increasing the value of power, may raise the risk of an autocratic transition. Lastly, the stabilization hypothesis, contrary to the first two, claims that FDI can enhance dictatorships’ stability by opening new opportunities for distributing benefits to regime elites. The empirical analysis, covering about 100 countries for the time period 1970–2008, uses data on autocratic breakdowns and transition types to test the above hypotheses. The reported evidence does not support the liberalization or the state-capture hypothesis. FDI is found to reduce the likelihood of democratic transitions.     

Bringing the Company Back In: A Firm-Level Analysis of Foreign Direct Investment

The industry standard for studying multinational corporations (MNCs) has been to evaluate patterns in aggregate country-level measures of foreign direct investment (FDI). Though certainly related, these data are at best a proxy for the actual commercial and productive activities of multinationals that most political scientists purport to be interested in. Simply put, this is a very indirect way of testing theories about the sociopolitical and economic factors that motivate MNCs’ choice of host countries. This article introduces a new firm-level data set designed to get around this problem by permitting more direct analysis of multinationals’ foreign operations. It then revisits the relationship between regime type and direct investment, finding evidence that MNCs are more likely to establish new subsidiaries in democracies than in nondemocracies. However, further analysis reveals that the strength of this relationship varies by context. Specifically, MNCs rely on regime type as an indicator of political risk when they lack an existing relationship with the host state. In addition, those operating in extractive industries are generally less responsive to political institutions than those operating in manufacturing or services. These results suggest that firm- and sector-specific factors deserve greater consideration than they have been given in the existing literature.     

Invest,Hold Up,or Accept?China in Multilateral Governance

China has played an inconsistent role in multilateral governance, sometimes contributing to the creation and maintenance of international regimes, sometimes free riding or even threatening to undermine multilateral regimes to improve its position. We show that the strategic context of a particular issue of international concern affects China's approach to multilateralism and argue that our approach adds additional leverage to existing theories that rely on assumptions about its inherent disposition or socialization processes. An emerging global power will be willing to invest more in supporting a regime when its outside options are relatively poor. When its outside options are good, it will free ride on the efforts of more established states if it is not a necessary player in maintaining regimes, and if it is seen as indispensable it will threaten to hold up regime support as a way to win concessions. We show that these two factors, outside options and indispensability, can help explain changes in China's strategy with respect to the issue of North Korea's nuclear program and the regulation of international finance.     

The Political Determinants of Foreign Direct Investment: A Firm-Level Analysis

Many large-N cross-national studies claim to show that political institutions and phenomena determine where foreign direct investment (FDI) flows. In this article, I argue that these studies tend to overemphasize statistical significance and often neglect to assess the explanatory or predictive power of their theories. To illustrate the problem, I estimate variations of a statistical model published in an influential article on “Political Risk, Institutions, and FDI.” I find that none of the political variables that the authors consider accounts for much of the variation in aggregate FDI inflows. To ensure that this underwhelming result is not driven by misspecification or measurement error, I leverage a large firm-level data set on the investment location decisions of thousands of multinational firms. Using nonparametric machine-learning techniques and out-of-sample tests, I show that gravity variables can help us develop very accurate expectations about firm behavior but that none of the 31 “political determinants” of FDI that I consider can do much to improve our expectations. These findings have important implications because they suggest that governments retain some room to move in the face of economic globalization.     

The emergence of post-crisis regional financial institutions in Asia—with a little help from Europe

Faced with the negative impact of regional and global financial crises, Asian countries have established joint-solution mechanisms over the last two decades in order to better protect themselves from short-term outflows of capital and from currency speculation. Despite some progress being made in regional financial cooperation, especially by the countries of the ASEAN+3 grouping, the overall degree of financial integration within the region remains surprisingly low, however. This contrasts sharply with the keen interest of many Asian countries in gaining a stronger voice within the multinational finance institutions (MFIs), and especially within the International Monetary Fund (IMF). Unable to initiate major governance reforms of the MFIs, Asian countries have not only set up regional support liquidity arrangements but also their own multilateral development banks (MDBs). While the USA and to some extent Japan have tried to prevent a rebalancing of power within the global financial architecture, major European countries have actively supported these changes by becoming founding members of the China-led Asian Infrastructure Investment Bank (AIIB). Taking a New Institutional Economics (NIE) perspective, the paper aims to explain why some regional financial institutions are more attractive for Asian countries than others and why European countries are supporting Asia’s attempt to gain more weight in global financial governance (GFG)—and, thus, contribute to the acceleration of the power shift away from the USA toward emerging Asian economies in general and China in particular.     

略论《南海各方行为宣言》的困境与应对

中国对南中国海四大群岛之主权,实有充分理据。《南海各方行为宣言》是历史上第一个关于南海问题的多边政治文件,在各国围绕南中国海问题之解决所进行的努力中具有里程碑式的意义。但不容乐观的是该宣言亦存许多不足之处,其实施已面临困境。中国应坚持以维护中国对该地区固有主权为基本原则,高度重视南海问题与台湾问题的相关性,在注意探讨与区内个别国家率先达成实质性双边谅解的可能的基础上,积极倡导并努力实现有关各方共同签署更具法律拘束力的南海问题多边条约。     

亚丁湾海上非传统安全合作与机制建设

海盗活动的日益猖獗使海上航行安全问题再次成为世界各国关注的焦点.在20国海军40余艘军舰的巡航下,亚丁湾暂时风平浪静,索马里海盗活动大为收敛,但远未就此罢手,劫船事件仍时有发生.     

全球安全倡议的文明基底、理论逻辑与实践路径

全球安全倡议根植于中华文明的连续性、创新性、统一性、包容性与和平性，并因此展现出以合作安全、开放安全、共同安全与多边安全为特征的理论逻辑。美国出于维护其全球霸权的动机，对亚太地区施加以竞争安全、封闭安全、分割安全和单边安全为特征的传统安全范式，导致该地区大国战略博弈日益加剧、安全阵营化趋势加快、安全困境螺旋上升和非传统安全竞争日趋升温，破坏了该地区的和平与稳定。全球安全倡议提供了一个新的安全范式，即以合作安全应对竞争安全、以开放安全对抗封闭安全、以共同安全替代分割安全、以多边安全超越单边安全。针对美国推行遏制中国的“印太战略”，全球安全倡议为实现亚太地区的普遍安全和持久和平提供了实践路径，包括促进地区大国良性互动、完善以东盟为中心的地区安全机制、塑造地区国家间的相互信任，以及强化地区非传统安全合作。     

Trade, institutions, and the timing of GATT/WTO accession in post-colonial states

Prior to 1995, when the World Trade Organization (WTO) superseded the General Agreement on Tariffs and Trade (GATT), a number of states took advantage of GATT Article XXVI:5(c), which allowed them—as former colonies or component territories of existing GATT members—to quickly and simply join the multilateral trade regime. The speed with which these post-colonial accessions took place, however, varied widely: some states joined immediately upon independence, while others joined much later. Still other post-colonial states passed on this opportunity, only to subsequently begin the longer, more onerous accession process required of other GATT/WTO applicants. Our paper seeks to explain this variation in the timing of post-colonial states’ accession to the GATT/WTO. We argue that three key variables explain the timing of accession decisions: 1) a country’s trade ties with existing member-states; 2) its existing preferential trade agreement (PTA) commitments; and 3) its domestic political institutions—specifically, the country’s level of democracy. Furthermore, we argue that the effects of these variables are conditional upon each other: post-colonial countries with more extensive trade ties to existing member-states were more likely to accede rapidly under Article XXVI:5(c), but only under specific conditions—namely, when they had not already locked in ties with key trading partners through bilateral or regional PTAs, and when they were governed by a more democratic regime. We test this argument empirically using an original dataset of 61 post-colonial states from 1951 to 2004. Our results strongly support this explanation of GATT/WTO accession and help to clarify the pattern of participation in the multilateral trading system that we have observed over the last half-century.     

Soldiers,Civilians, and Multilateral Humanitarian Intervention

Approval from the United Nations or NATO appears to have become a necessary condition for US humanitarian military intervention. Conventional explanations emphasizing the pull of legitimacy cannot fully account for this given that US policymakers vary considerably in their attachment to multilateralism. This article argues that America's military leaders, who are consistently skeptical about humanitarian intervention and tend to emphasize its costs, play a central role in making multilateral approval necessary. As long as top-ranking generals express strong reservations about intervention and no clear threat to US national security exists, they can veto the use of force. In such circumstances, even heavyweight “humanitarian hawks” among the civilian leadership, who initially may have wanted to bypass multilateral bodies to maximize US freedom of action, can be expected to recognize the need for UN or NATO approval—if only as a means of mollifying the generals by reassuring them about the prospect of sustained multilateral burden sharing. Two case studies drawing on interviews with senior civilian and military officials illustrate and probe the plausibility of the argument.     

When BITs have some bite: The political-economic environment for bilateral investment treaties

Political risk frequently impedes the flow of capital into developing countries. In response, governments often adopt innovative institutions that aim to attract greater flows of international investment and trade by changing the institutional environment and limiting the risk to outside investors. One primary example of this is the Bilateral Investment Treaty (BIT), aimed specifically at increasing the flow of foreign direct investment (FDI) to developing countries. Yet the literature in political science and economics is inconclusive about whether or not BITs do indeed stimulate FDI, and it provides conflicting theoretical reasoning for the claimed connection. This article argues that BITs do attract FDI to developing countries, but the story is a complicated one. Two important factors must be taken into account. First, BITs cannot entirely substitute for an otherwise weak investment environment. Countries must have the necessary domestic institutions in place that interact with BITs to make these international commitments credible and valuable to investors. Second, as the coverage of BITs increases, overall FDI flows to developing countries increase. However, although remaining positive, the marginal effect of a country’s BITs on its own FDI may fall because of heightened competition for FDI from other BIT countries. Using data from 97 countries for 1984–2007, we provide empirical evidence consistent with both of these theoretical claims.     

The choice among aid donors: The effects of multilateral vs. bilateral aid on recipient behavioral support

Scholars studying foreign assistance differ over whether multilateral aid is preferable to bilateral aid for promoting development, but nearly all build their cases primarily on highly aggregated cross-national time-series data. We investigate this topic experimentally from the perspective of those whom the foreign aid directly affects: recipient citizens and elites. We thus report results of a survey experiment with behavioral outcomes on more than 3000 Ugandan citizens and over 300 members of Uganda’s Parliament. In spite of a large literature suggesting differences, the findings generally reveal few substantive differences in citizens’ and elites’ preferences and behavior toward the two types of aid. While no strong pattern of differences emerges, limited evidence suggests that the public evinces greater trust in multilateral institutions, and both masses and elites feel that multilateral aid is more transparent. Overall, these null results inform an ever-expanding literature, which is increasingly articulating distinctions between multilateral and bilateral aid. At least in the minds of the recipients, however, multilateral and bilateral aid may not in fact be all that different. This accords with the literature noting the strong overlap in aid organizations and bemoaning the fact that they do not specialize more. Our results raise the question about why have both multilateral and bilateral aid donors if they in effect do the same thing.