Campaigning for Capital: Fair Elections and Foreign Investment in Comparative Perspective

Touchton, Michael

doi:10.1080/03050629.2016.1093475

Cited by 4 publications

(1 citation statement)

References 48 publications

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“…Several studies have examined the role of institutional factors on FDI, focusing on civil liberties (Adam & Filippaios, 2007; Busse, 2004; Busse & Hefeker, 2007; Harms & Ursprung, 2002), policy uncertainty (Brada et al., 2006; Chen et al., 2019; Jensen, 2008; Julio & Yook, 2016), governance (Gangi & Abdulrazak, 2012; Gani, 2007; Globerman & Shapiro, 2002), quality of institutions (Ali et al., 2010; Bénassy‐Quéré et al., 2007; Buchanan et al., 2012; Daude & Stein, 2007; Perez et al., 2018; Sabir et al., 2019), democracy (Asiedu & Lien, 2011; Gossel, 2017, 2018, 2022; Jensen, 2003, 2008; Li, 2009; Li and Resnick, 2003; Resnick, 2001) and elections (Gossel, 2020; Touchton, 2015). These studies have shown that good institutions are positively associated with FDI.…”

Section: Theoretical Backgroundmentioning

confidence: 99%

Constitutional instability and foreign direct investment in Africa

Nvuh-Njoya

Keneck-Massil

Thierry³

2023

Econ of Transit and Inst Chang

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This paper assesses the impact of constitutional changes on foreign direct investment (FDI) in 49 African countries during the period 1980–2020. The paper uses a dummy variable related to the year of the constitutional change and the number of changes during the study period to capture the frequency of constitutional changes. The results reveal that an increase in the frequency of constitutional changes negatively affects FDI. The negative relationship between constitutional change and FDI is consistent across different measures of constitutional change and FDI and is robust to alternative empirical approaches. These results suggest that frequent constitutional changes may create uncertainty and instability in the investment climate, which may discourage foreign investors from investing in these African countries. The study provides evidence for policymakers that a stable constitutional framework may attract FDI in African countries.

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Section: Theoretical Backgroundmentioning

confidence: 99%

Constitutional instability and foreign direct investment in Africa

Nvuh-Njoya

Keneck-Massil

Thierry³

2023

Econ of Transit and Inst Chang

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FDI and Elections in Sub-Saharan Africa

Gossel

2020

Eur J Dev Res

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The effect of sovereign credit ratings on democracy in sub-Saharan Africa

Gossel,

Mutize

2024

IJOEM

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PurposeThis study investigates (1) whether democratization drives sovereign credit ratings (SCR) changes (the “democratic advantage”) or whether SCR changes affect democratization, (2) whether the degree of democratization in sub-Saharan African (SSA) countries affects the associations and (3) whether the associations are significantly affected by resource dependence.Design/methodology/approachThis study investigates the effects of SCR changes on democracy in 22 SSA countries over the period of 2000–2020 VEC Granger causality/block exogeneity Wald tests, and impulse responses and variance decomposition analyses with Cholesky ordering and Monte Carlo standard errors in a panel VECM framework.FindingsThe full sample impulse responses find that a SCR shock has a long-run detrimental effect on the democracy and political rights but only a short-run positive impact on civil liberties. Among the sub-samples, it is found that the extent of natural resource dependence does not affect the magnitude of SCR shocks on democratization mentioned above but it is found that a SCR shock affects long-run democracy in SSA countries that are relatively more democratic but is more likely to drive democratic deepening in less democratic SSA countries. The full sample variance decompositions further finds that the variance of SCR to a political rights shock outweighs the effects of all the macroeconomic factors, whereas in more diversified SSA countries, the variances of SCR are much greater for democracy and political rights shocks, which suggests that democratization and political rights in diversified SSA economies are severely affected by SCR changes. In the case of the high and low democracy sub-samples, it is found that the variance of SCR in the relatively higher democracy sub-sample is greater than in the low democracy sub-sample.Social implicationsThese results have three implications for democratization in SSA. First, the effect of a SCR change is not a democratically agnostic and impacts political rights to a greater extent than civil liberties. Second, SCR changes have the potential to spark a negative cycle in SSA countries whereby a downgrade leads to a deterioration in socio-political stability coupled with increased financial economic constraints that in turn drive further downgrades and macroeconomic hardship. Finally, SCR changes are potentially detrimental for democracy in more democratic SSA countries but democratically supportive in less democratic SSA countries. Thus, SSA countries that are relatively politically sophisticated are more exposed to the effects of SCR changes, whereas less politically sophisticated SSA countries can proactively shape their SCRs by undertaking political reforms.Originality/valueThis study is the first to examine the associations between SCR and democracy in SSA. This is critical literature for the Africa’s scholarly work given that the debate on unfair rating actions and claims of subjective rating methods is ongoing.

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Campaigning for Capital: Fair Elections and Foreign Investment in Comparative Perspective

Cited by 4 publications

References 48 publications

Constitutional instability and foreign direct investment in Africa

Constitutional instability and foreign direct investment in Africa

FDI and Elections in Sub-Saharan Africa

The effect of sovereign credit ratings on democracy in sub-Saharan Africa

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