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Political Risk and the Institutional Environment for Foreign Direct Investment in Latin America : An Empirical Analysis with a Case Study on Mexico.

Bibliographic Details
Main Author: Stosberg, Jörg.
Format: eBook
Language:English
Published: Frankfurt a.M. : Peter Lang GmbH, Internationaler Verlag der Wissenschaften, 2004.
Edition:1st ed.
Series:Goettinger Studien Zur Entwicklungsoekonomik / Goettingen Studies in Development Economics Series
Subjects:
Electronic books.
Online Access:Click to View
Table of Contents:
  • Cover
  • List of Figures
  • List of Tables
  • List of Abbreviations
  • List of Variables
  • 1 Introduction
  • 1.1 The Problem
  • 1.2 Concept and Methodology
  • 2. Risk in the Theory of Investment
  • 2.1 General Theory of Investment
  • 2.1.1 Basic Theory of Investment
  • 2.1.1.1 Definition and Categories of Investment
  • 2.1.1.2 Opportunity Costs, Time Preference and Net Present Value Approach
  • 2.1.2 Models of Investment under Certainty
  • 2.1.2.1 Overview
  • 2.1.2.2 The q-theory of Tobin
  • 2.1.2.2.1 The Basic Model
  • 2.1.2.2.2 The Romer Model
  • 2.1.2.2.2.1 The Model
  • 2.1.2.2.2.2 Analyzing the Model
  • 2.1.2.3 Critical Evaluation of the Models
  • 2.1.3 Investment under Uncertainty
  • 2.1.3.1 Overview
  • 2.1.3.2 Characteristics of Uncertainty and Risk
  • 2.1.3.3 Uncertainty in the Romer Model
  • 2.1.3.3.1 Modification of the Model
  • 2.1.3.3.2 Effects of Uncertainty on Reversible Investments
  • 2.1.3.3.3 Effects of Uncertainty on Irreversible Investment
  • 2.1.3.4 The Dixit/Pindyck Model
  • 2.1.3.4.1 Overview
  • 2.1.3.4.2 The Model
  • 2.1.3.4.3 Analyzing the Model
  • 2.1.3.5 Critical Evaluation of the Models
  • 2.1.4 Summary of Propositions
  • 2.2 Theory of International Investment
  • 2.2.1 Overview
  • 2.2.2 Definition and Characteristics of FDI
  • 2.2.3 Theoretical Determinants of FDI
  • 2.2.3.1 Overview
  • 2.2.3.2 The Eclectic Paradigm as Analytical Framework
  • 2.2.4 Empirical Studies of Aggregate FDI
  • 2.2.4.1 Overview
  • 2.2.4.2 Empirical Determinants of FDI
  • 2.2.5 Political Risk and International Investment
  • 2.2.5.1 Definition of Political Risk
  • 2.2.5.2 Categories of Political Risk and Anecdotal Evidence
  • 2.2.5.3 Modeling Political Risks for International investors
  • 2.2.5.3.1 Existing Models of Political Risks
  • 2.2.5.3.2 Implications of General Investment Models
  • 2.2.5.4 Empirical Evidence
  • 2.3 Concluding Remarks.
  • 2.4 Chapter Summary
  • 3. Political Risk and National Institutions
  • 3.1 Political Institutions and Economic Performance
  • 3.1.1 Overview
  • 3.1.2 The Analytical Framework
  • 3.1.2.1 Theoretical Foundations
  • 3.1.2.2 Property Rights
  • 3.1.2.3 The Concept of Credible Commitment
  • 3.1.2.4 Rule of Law
  • 3.1.2.5 Discretionary Freedom of the Government
  • 3.1.2.6 The Concept of Social Capital
  • 3.1.3 Political Regime Type and FDI
  • 3.1.3.1 Systematic Order Of Political Regimes
  • 3.1.3.2 Economic Analysis of Political Regimes
  • 3.2. Modeling the Emergence of Political Risks
  • 3.2.1 Classical Political Risk Models
  • 3.2.2 The Political Constraints Model
  • 3.2.3 The Effective Party Approach
  • 3.2.4 Synthesis and Hypothesis
  • 3.3 Empirical Measures of Political Risks
  • 3.3.1 Overview
  • 3.3.2 The International Country Risk Guide (ICRG)
  • 3.3.3 The POLCON-Index
  • 3.3.4 Critical Evaluations of the Indices
  • 3.4 Mitigating Political Risk
  • 3.4.1 Overview
  • 3.4.2 National Mitigation Strategies
  • 3.4.2.1 Investment Incentives, Social Standards and Environmental Legislation
  • 3.4.2.2 Macroeconomic Stability
  • 3.4.2.3 Accountability, Transparency and Rules-Based Governance
  • 3.4.3 International Strategies
  • 3.4.3.1 Multilateral Agreements
  • 3.4.3.2 Bilateral Agreements and Regional Integration
  • 3.5 Conclusion
  • 3.6 Chapter Summary
  • 4. Political Risk and FDI in Latin America
  • 4.1 Stylized Facts on Foreign Investment in Latin America
  • 4.2 Empirical Investigation of the Impact of Political Risk on FDI
  • 4.2.1 Methodology
  • 4.2.2 Model Specification
  • 4.2.3 Data Issues
  • 4.2.4 Results
  • 4.3 Conclusions
  • 4.4 Chapter Summary
  • 5. Political Risk and FDI in Mexico
  • 5.1 Politics in Mexico
  • 5.1.1 Stylized Facts of Mexican Political History
  • 5.1.2 The Current Political System in Mexico
  • 5.1.2.1 Overview.
  • 5.1.2.2 The Executive Branch of Government
  • 5.1.2.3 The Legislative Branch of Government
  • 5.1.2.4 The National Judiciary
  • 5.1.2.5 The Political Parties
  • 5.1.2.6 The Federalist System
  • 5.1.2.7 Freedom of Speech, Press and Media
  • 5.2 Foreign Capital Flows to Mexico
  • 5.2.1 Brief Economic History
  • 5.2.1.1 Overview
  • 5.2.1.2 The Reform Period 1982-today
  • 5.2.2 The Evolution of Foreign Investment to Mexico
  • 5.2.2.1 The Mexican Foreign Investment Legislation
  • 5.2.2.1.1 The Evolution of the National FDI Legislation
  • 5.2.2.1.2 Investment Legislation of NAFTA and other Bilateral Agreements
  • 5.2.2.2 Mexican Foreign Investment Policy and Inflows of FDI to Mexico
  • 5.2.2.3 The Structure and Geographical Origins of FDI to Mexico
  • 5.3 Political Risk in Mexico
  • 5.3.1 Overview
  • 5.3.2 The Macroeconomic Environment
  • 5.3.3 Mexican Institutions and Risk
  • 5.3.3.1 Government Stability, Political Constraints and Regime Type
  • 5.3.3.2 Rule Of Law
  • 5.3.3.3 Corruption
  • 5.3.3.4 Protection of Property Rights
  • 5.3.4 Societal Factors of Risk
  • 5.3.4.1 Overview
  • 5.3.4.2 Ethnic, Religious and other Internal Conflicts
  • 5.3.4.3 Governmental Legitimacy in Mexico
  • 5.3.5 Aggregate Political Risk in Mexico
  • 5.4 Risk Mitigation Strategies in Mexico
  • 5.4.1 National Risk Mitigation Strategies
  • 5.4.1.1 Investment Enhancement by Incentives
  • 5.4.1.2 The Beauty Contest
  • 5.4.2 The International Risk Mitigation Strategy
  • 5.5 Conclusion
  • 5.6 Chapter Summary
  • 6. Conclusion and Outlook
  • Annex I
  • Annex II
  • References.

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