Does Foreign Investment Really Reduce Repression?1

Abstract

Sorens, Jason and William Ruger. (2012) Does Foreign Investment Really Reduce Repression? International Studies Quarterly, doi: 10.1111/j.1468‐2478.2012.00722.x © 2012 International Studies Association Cross‐national empirical studies have found that foreign investment has beneficial effects on human rights. We argue that these studies poorly operationalize foreign investment to test theoretical predictions and suffer from sampling bias. We demonstrate that investment stock, rather than inflow, is the superior operationalization of structural dependence theory. We construct regression models of government repression of physical integrity rights, include much more data than previous studies, and use a new multiple imputation algorithm for time‐series cross‐section data to resolve sampling bias. We find no evidence that foreign investment affects repression, contradicting conventional wisdom and suggesting that the political gains from repression frequently dwarf any economic costs for governments.

Investor Rights versus Human Rights: Do Bilateral Investment Treaties Tilt the Scale?

“…This is similar toGreenhill, Mosley, and Prakash (2009), who show that labor institutions in importing countries affect the labor laws of exporting countries (although they affect labor practices to a lesser degree), and toCao, Greenhill and Prakash (2013), who show that importer countries with good human rights records can diffuse good behavior to the exporter countries.91 Similar toSorens and Ruger (2012), however, we find no effect for the stock of FDI.…”

Bilateral Investment Treaties (BITs): The Global Investment Regime and Human Rights

“…A positive effect of FDI on human rights practices is identified inRichards et al (2001),Hafner-Burton (2005a) Sorens and Ruger (2012),. however, find no effect.…”

Foreign Investment and State Conflicts in Africa

“…FDI stock rather than inflow is used here to investigate the structural role of FDI in an economy, given that investment inflows may be high in a foreign-capital dependent state simply due to a temporarily sustained economic growth rate (e.g. China in the 1980s-1990s) or may be negative in a foreign-capital dependent state due to a short and sudden economic downturn, as in New Zealand during 2001 (see Sorens & Ruger, 2012). Using FDI inflow here would incorrectly track these temporary shifts in investments, which are not assumed to be correlated with changes in the strategic behavior of the state or other actors given that the study focuses on political violence as a strategic response/incentive in the accumulation of FDI -in other words, that FDI has a structural role on the economic policy of the state.…”