Human rights and foreign direct investment: A two-stage analysis

Academic Article

Abstract

  • The authors analyze the impact of human rights conditions on foreign direct investment (FDI). Extant literature in this area raises conflicting expectations. Although the "conventional wisdom" posits that repression creates a stable, compliant, and relatively inexpensive host for FDI, there are contending arguments that the protection of human rights reduces risk and contributes toward economic efficiency and effectiveness. Moreover, the burgeoning "spotlight" regime may also punish firms who locate in repressive regimes. Conceptualizing FDI as a two-part process - the initial decision to invest and the subsequent decision of investment amount - the authors assess human rights as a determinant of FDI. Using a two-stage model, they test their hypotheses across developing countries for the years 1980 to 2003. They find that human rights are a significant determinant of the amount of FDI inflows. © 2006 Sage Publications.
  • Published In

    Digital Object Identifier (doi)

    Author List

  • Blanton SL; Blanton RG
  • Start Page

  • 464
  • End Page

  • 485
  • Volume

  • 45
  • Issue

  • 4