tag:blogger.com,1999:blog-1331441403058020963.post7210265108904856960..comments2024-03-28T06:49:24.930-04:00Comments on International Political Economy at the University of North Carolina: FDI Undeterred: Argentina's Messy Investment Climate Thomas Oatleyhttp://www.blogger.com/profile/14092437150746625670noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-1331441403058020963.post-26211638461897677402012-12-20T14:05:17.913-05:002012-12-20T14:05:17.913-05:00Emmanual,
Thanks, yes, there is a lot of work bei...Emmanual,<br /><br />Thanks, yes, there is a lot of work being done on FDI in natural resource dependent economies. The Jensen & Johnston piece you mention is a good example of work that probes government incentives in such environments. But, my point is more about firm behavior, which is not their analytical focus. Their central finding is that political risk in natural resource-rich countries is higher than in countries without such resources, but that doesn't say anything about what firms do with that information. (To be clear, I think their work is good, I'm just asking a slightly different question here.)<br />Sarah Bauerle Danzmanhttps://www.blogger.com/profile/11268909823574840085noreply@blogger.comtag:blogger.com,1999:blog-1331441403058020963.post-9087399757401176802012-12-20T13:58:03.571-05:002012-12-20T13:58:03.571-05:00Methinks this CPS article I have used while teachi...Methinks this <a href="http://ipec.gspia.pitt.edu/Portals/7/Papers/PoliticalRiskandNaturalResources,3.17.10,UPITTDRAFT.pdf" rel="nofollow">CPS article</a> I have used while teaching political risk analysis sheds light on the subject matter. In essence, the likes of Argentina expropriate anyway since they believe their natural resources are too attractive for foreign investors to stay away from for far too long:<br /><br />There is a growing literature on how natural resources affect both economic performance and political regimes. In this article the authors add to this literature by focusing on how natural resource wealth affects the incentives of governments to uphold contracts with foreign investors across all sectors. They argue that although all states suffer reputation costs from reneging on contracts, governments in natural-resource-dependent economies are less sensitive to these costs, leading to a greater probability of expropriation and contract disputes. Specifically, leaders weigh the benefits of reneging on contracts with investors against the reputation costs of openly violating agreements with firms. The authors’ theoretical model predicts a positive association between resource wealth and expropriation. Using a data set from the political risk insurance industry, the authors show that resource dependent economies have much higher levels of political risk.Emmanuelhttps://www.blogger.com/profile/04615366847433704476noreply@blogger.com