Do Foreign Investors Punish Democracy? Theory and Empirics, 1984-2001

  title={Do Foreign Investors Punish Democracy? Theory and Empirics, 1984-2001},
  author={Jo Jakobsen and Indra de Soysa},
  journal={PSN: Democratic Theory (Topic)},
Some claim that when level of property rights protection is controlled, democracy lowers foreign direct investment (FDI) to developing countries ( Li and Resnick 2003 ). We critically examine the theoretical claims of the pessimistic arguments and show that FDI responds to preferences of countries and that democracies have a clear preference for FDI given that the scarce factor - capital - will find it harder under democracy to seek rents by raising barriers to entry. On the other hand, labor… Expand
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