6533b85ffe1ef96bd12c2540

RESEARCH PRODUCT

Foreign Direct Investment in oil-abundant countries: The role of institutions

Jordi PaniaguaJuliette Milgram-baleixFederico Carril-cacciaFederico Carril-caccia

subject

Análisis económicoInternationalityCorruptionSciencemedia_common.quotation_subjectOil and Gas IndustryForeign direct investmentNatural resourceGood governance0502 economics and businessInvestments050207 economicsDeveloping Countriesmedia_commonCurse050208 financeMultidisciplinaryEconomía PolíticaQ05 social sciencesRInternational economicsDemocracyNatural resourceDemocracyRole of institutionsRule of lawModels EconomicGreenfield projectGovernmentMedicineBusinessResearch Article

description

The present work reassesses the impact of good governance and democracy on Foreign Direct Investment (FDI) in oil-abundant countries. To this end, we estimate the effect of host countries’ institutions on greenfield FDI, using a gravity equation for a dataset that covers 182 countries during 2003-2012. Our findings confirm that compliance to rule of law, lack of corruption, political stability and democracy could boost new FDI links through the extensive margin. Our results could not rule out the “oil curse”, meaning that oil producers attract fewer new greenfield projects than similar countries without oil. Unlike other studies, we show that the impact of institutions is not necessarily undermined by the presence of natural resources. Consejería de Economía, Innovación, Ciencia y Empleo, Junta de Andalucía SEJ 340 Forum Euromediterraneen des Instituts de Sciences Economiques FEM41-07 Ministerio de Economía, Industria y Competitividad, Gobierno de España ECO2015-68057-R Generalitat Valenciana GV/2017/052

yearjournalcountryeditionlanguage
2019-01-01PLOS ONE
https://doi.org/10.1371/journal.pone.0215650