Nation-States and the Multinational Corporation: A Political Economy of Foreign Direct Investment

Nation-States and the Multinational Corporation: A Political Economy of Foreign Direct Investment

by Nathan M. Jensen
     
 

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ISBN-10: 069113636X

ISBN-13: 2900691136362

Pub. Date: 01/21/2008

Publisher: Princeton University Press

What makes a country attractive to foreign investors? To what extent do conditions of governance and politics matter? This book provides the most systematic exploration to date of these crucial questions at the nexus of politics and economics. Using quantitative data and interviews with investment promotion agencies, investment location consultants, political risk

Overview

What makes a country attractive to foreign investors? To what extent do conditions of governance and politics matter? This book provides the most systematic exploration to date of these crucial questions at the nexus of politics and economics. Using quantitative data and interviews with investment promotion agencies, investment location consultants, political risk insurers, and decision makers at multinational corporations, Nathan Jensen arrives at a surprising conclusion: Countries may be competing for international capital, but government fiscal policy-both taxation and spending-has little impact on multinationals' investment decisions.

Although government policy has a limited ability to determine patterns of foreign direct investment (FDI) inflows, political institutions are central to explaining why some countries are more successful in attracting international capital. First, democratic institutions lower political risks for multinational corporations. Indeed, they lead to massive amounts of FDI. Second, politically federal institutions, in contrast to fiscally federal institutions, lower political risks for multinationals and allow host countries to attract higher levels of FDI inflows. Third, the International Monetary Fund, often cited as a catalyst for promoting foreign investment, actually deters multinationals from investment in countries under IMF programs. Even after controlling for the factors that lead countries to seek IMF support, IMF agreements are associated with much lower levels of FDI inflows.

About the Author:
Nathan M. Jensen is assistant professor of political science at Washington University in St. Louis

Product Details

ISBN-13:
2900691136362
Publisher:
Princeton University Press
Publication date:
01/21/2008
Edition description:
New Edition
Pages:
216

Table of Contents

List of Illustrations     ix
Preface     xi
List of Abbreviations     xv
Introduction     1
Multinational Firms and Domestic Governments     23
Theory     40
The Race to the Bottom Thesis and FDI     53
Democracy and FDI     72
Veto Players and FDI     100
The IMF and FDI Inflows     129
Conclusion     146
Notes     157
References     167
Index     185

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