Political Risk and the Institutional Environment for Foreign Direct Investment in Latin America

The intensification of capital flows is an important characteristic of globalization. Attracting foreign direct investment is a viable way of ensuring the external financing of developing countries. Foreign direct investment flows, in turn, are determined by the decisions of multinational enterprises. One important determinant of investment decisions is the political environment of potential host countries. Political risks like expropriations, riots, revolutions or civil wars are important obstacles for investment. This book empirically analyzes the impact of political risks on foreign direct investment flows to Latin American countries. A case study of Mexico and its policy towards foreign investors offers further empirical evidence for the importance of the political environment for investment decisions of multinationals.

Autorentext

The Author: Jörg Stosberg studied Law and Economics in Münster and Paris. After graduating he worked as a researcher at the University of Göttingen where he received his Ph.D. in Economics. In 2004 he joined the Federal Foreign Office and currently works for the German Ministry of Finance in Berlin.

Inhalt

Contents: Theoretical analysis of investment decisions with political risks - Classification of political risks - Theoretical analysis of the emergence of political risks - Empirical analysis of the impact of political risk on foreign direct investment flows to Latin America - Empirical analysis of the impact of political risk on foreign direct investment flows to Mexico.