Reference
Okara, A. (2023). Does Foreign Direct Investment Promote Political Stability? Evidence from Developing Economies. Economic Modelling.
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on the May 30, 2023
Focus on research
The growing importance of FDI flows to developing countries has implications for their institutional environment as (i) foreign investors do not always adapt to the local environment, (ii) FDI has induced institutional reforms in countries competing to attract them, and (iii) the socioeconomic effects of FDI can trigger institutional changes. The latter argument is what the paper mainly explores in positing that by generating economic opportunities, FDI promotes political stability. The results clearly align with this argument. Accounting for political repression, the findings also highlight that FDI-induced stability is compatible with governmental respect for human rights.
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