Do Civil and Political Repression Really Boost Foreign Direct Investments?

22 Pages Posted: 11 Apr 2001

See all articles by Heinrich W. Ursprung

Heinrich W. Ursprung

University of Konstanz; CESifo (Center for Economic Studies and Ifo Institute)

Philipp Harms

Study Centre Gerzensee

Date Written: February 2001

Abstract

Multinational enterprises are often accused to have a preference for investing in countries in which the working populations' civil and political rights are largely disregarded. This paper presents an empirical investigation of the popular "political repression boosts FDI" hypothesis and arrives at the conclusion that the hypothesis is not supported. On the contrary, multinational enterprises rather appear to be attracted by countries in which civil and political freedom is respected. Our finding thus supports the notion that there is a positive relationship between democracy and economic growth.

Keywords: Foreign Direct Investment, Globalization, Democracy, Freedom

JEL Classification: F23, O19, P51

Suggested Citation

Ursprung, Heinrich and Harms, Philipp, Do Civil and Political Repression Really Boost Foreign Direct Investments? (February 2001). CESifo Working Paper Series No. 421. Available at SSRN: https://ssrn.com/abstract=265418

Heinrich Ursprung (Contact Author)

University of Konstanz ( email )

Konstanz, D-78457
Germany
+49 7531 88 3713 (Phone)

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Philipp Harms

Study Centre Gerzensee ( email )

CH-3115 Gerzensee
Switzerland

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