Governance and Foreign Investment in China, India, and by Yu Zheng PDF

By Yu Zheng

ISBN-10: 0472119044

ISBN-13: 9780472119042

Yu Zheng demanding situations the concept democracy is the prerequisite for constructing international locations to draw overseas direct funding (FDI) and advertise financial development. He examines the connection among political associations and FDI by using cross-national research and case reports of 3 quickly becoming Asian economies with a spotlight at the position of microinstitutional “special fiscal zones” (SEZ).

China’s authoritarian method enables daring, radical monetary reform, yet China has attracted FDI principally as a result of its more and more credible funding atmosphere in addition to its important and native governments’ efforts to beat constraints on funding. India’s democratic associations offer extra political insurance to international traders, yet its marketplace turned conducive to FDI simply whilst the govt followed extra versatile funding rules. Taiwan’s democratic transition shifted its stability of coverage credibility and suppleness, which was once crucial for the nation’s financial takeoff and sustained growth.

Zheng concludes extra exact figuring out of the connection among political associations and FDI comes from cautious research of institutional preparations that entail a trade-off among credibility and adaptability of governance.

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Additional resources for Governance and Foreign Investment in China, India, and Taiwan: Credibility, Flexibility, and International Business

Example text

The data set includes up to 135 developing countries in the period between 1980 and 2008. The central hypothesis is that veto players have a nonlinear effect on FDI (H1). 3 The data of FDI inflows were obtained from the World Development Indicators (WDI) database for the period between 1980 and 2008 and on a net basis (capital transactions’ credits less debits between direct investors and their foreign affiliates). Independent Variable The independent variable measures the level of institutional checks.

Their different governance outcomes, although partially shaped by their distinct political insti- Political Institutions, Governance, and Foreign Direct Investmentâ•… 23 tutions, are more complex than what the democracy/autocracy dichotomy would suggest. Despite their remarkable economic progress, all three economies continue to face severe institutional and governance problems. They also have diverse local institutions that impinge on policy credibility and flexibility. China’s authoritarian system gives the government the capacity to take bold initiatives in launching radical economic reforms, but the same system makes it more difficult to constrain bureaucrats from abusing their discretion.

2 shows, increasing veto players has negative marginal effect on FDI when the regulatory quality is low. As the regulatory quality improves, however, the marginal effect will become positive. By contrast, the coefficient on the interaction term between polity and regulatory quality is not statistically significant, indicating that the effect of democracy on FDI does not depend on the initial condition of regulatory quality. Moreover, the inclusion of both constitutive and interaction terms has significantly improved the explanatory power of the specifications, indicated by the dramatic increase in R-�square.

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Governance and Foreign Investment in China, India, and Taiwan: Credibility, Flexibility, and International Business by Yu Zheng


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