The Politics of Foreign Direct Investment into Developing Countries: Increasing FDI through International Trade Agreements?

The flow of foreign direct investment into developing countries varies greatly across countries and over time. The political factors that affect these flows are not well understood. Focusing on the relationship between trade and investment, we argue that international trade agreements—GATT/WTO and preferential trade agreements (PTAs)—provide mechanisms for making commitments to foreign investors about the treatment of their assets, thus reassuring investors and increasing investment. These international commitments are more credible than domestic policy choices, because reneging on them is more costly. Statistical analyses for 122 developing countries from 1970 to 2000 support this argument. Developing countries that belong to the WTO and participate in more PTAs experience greater FDI inflows than otherwise, controlling for many factors including domestic policy preferences and taking into account possible endogeneity. Joining international trade agreements allows developing countries to attract more FDI and thus increase economic growth.     

Owning the issue agenda: Party strategies and vote choices in British elections

Explanations of party competition and vote choice are commonly based on the Downsian view of politics: parties maximise votes by adopting positions on policy dimensions. However, recent research suggests that British voters choose parties based on evaluations of competence rather than on ideological position. This paper proposes a theoretical account which combines elements of the spatial model with the ‘issue ownership’ approach. Whereas the issue ownership theory has focused mainly on party competition, this paper examines the validity of the model from the perspective of both parties and voters, by testing its application to recent British general elections. Our findings suggest that as parties have converged ideologically, competence considerations have become more important than ideological position in British elections.     

Aid: A mixed blessing

Despite a growing emphasis by aid agencies on local participation and consultation, the recipients of aid commonly have mixed, if not hostile, responses to relief assistance. Agencies need to acknowledge the inequalities that are inherent in an aid relationship, and be more judicious in determining their proper role. The author calls for aid providers and recipients to accept our innate human equality and our circumstantial inequality in order to establish relationships of mutual respect and contemporaneous enjoyment of each other.