Foreign Direct Investment in oil-abundant countries: The role of institutions
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Show full item recordEditorial
PLOS
Date
2019-04-23Referencia bibliográfica
Carril-Caccia F, Milgram-Baleix J, Paniagua J (2019) Foreign Direct Investment in oilabundant countries: The role of institutions. PLoS ONE 14(4): e0215650
Sponsorship
This work was supported by: 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]; and Generalitat Valenciana [GV/2017/052].Abstract
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.