Foreign direct investment and civil liberties: A new perspective

Antonis Adam, Fragkiskos Filippaios

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56 Citations (Scopus)


The conjecture that democracy discourages foreign direct investment (FDI) has been widely refuted in empirical studies. However, we find support of this view. We distinguish between civil and political liberties and propose that multinational firms tend to invest in countries with low civil but with high political liberties. We show that the negative relationship between civil liberties and FDI is hump-shaped. A threshold level of civil liberties exists, below which repression of civil liberties is associated with more FDI. The results are explained by different economic motives for FDI in different groups of countries.
Original languageEnglish
Pages (from-to)1038-1052
Number of pages15
JournalEuropean Journal of Political Economy
Issue number4
Publication statusPublished - Dec 2007

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