The Political Influence of Foreign Firms in Developing Countries

Desbordes, Rodolphe; Vauday, Julien

doi:10.1111/j.1468-0343.2007.00317.x

Cited by 80 publications

(35 citation statements)

References 60 publications

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“…Firms that are foreign-owned and operate in other countries do not have statistically significant relationship with political influence (which is consistent with Desbordes and Vauday, 2007). The variables with statistically significant relationships support our second hypothesis that other firm characteristics significantly affect political influence.…”

Section: Resultssupporting

confidence: 88%

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Political Influence of Firms in the Tradables and Non-Tradables Sectors: A Cross-Country Analysis

et al. 2011

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Recent theoretical studies have shown that firms lobby government agencies to influence the structure of trade policies. This article empirically examines whether firms classified as either exporting or import‐competing (i.e. firms in the tradables sector) have differential levels of political influence relative to domestic firms that only produce non‐traded goods (i.e. firms in the non‐tradables sector). We use a rich firm‐level, cross‐sectional dataset from the World Business Environment Survey to achieve this objective. Results from the analysis reveal that exporting or import‐competing firms do have more political influence relative to domestic firms that neither export nor produce import‐competing goods. Market structure, firm age, firm size, government ownership, and dependence on public infrastructure also affect the extent of political influence that firms have.

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Section: Resultssupporting

confidence: 88%

“…One study is by Desbordes and Vauday (2007) where they directly examined whether foreign firms have more "legal" political influence (i.e. through lobbying rather than bribing) as compared with domestic firms.…”

Section: Introductionmentioning

confidence: 99%

Political Influence of Firms in the Tradables and Non-Tradables Sectors: A Cross-Country Analysis

et al. 2011

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“…Given the relationship between the quality of a country's property rights institutions and the level of political risk, MNCs should have an incentive to lobby for reform. Several studies highlight how MNCs engage with a host country's political processes to mitigate political risk (Luo 2001;Henisz 2002b;Desbordes and Vauday 2007;Malesky 2009;Jensen et al 2012;Weymouth 2012;Bastiaens 2013). Moreover, Markus (2012) provides evidence that MNCs form a crucial alliance with SMEs in lobbying for better property rights protections.…”

Section: A Theory Of Bits and Political Survivalmentioning

confidence: 99%

“…In capital-scarce (developing) countries, MNCs can expect high rates of return on their investment provided the political climate is favorable for private enterprise. To reduce political risk, MNCs expend a significant amount of resources lobbying host governments for various public goods related to property rights protections and enforcement (Henisz 2002b;Desbordes and Vauday 2007;Malesky 2009;Jensen et al 2012;Markus 2012;Weymouth 2012). Such extensive activities inside of developing countries are quite costly.…”

Section: Introductionmentioning

confidence: 99%

Can I stay a BIT longer? The effect of bilateral investment treaties on political survival

Mazumder

2015

Rev Int Organ

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Bilateral Investment Treaties (BITs) have proliferated throughout the international system. While ostensibly commercial in purpose, do BITs have domestic political ramifications? I argue that BITs affect a leader's tenure through their effect on the property rights environment in developing countries. BITs, by segmenting a country's property rights environment for foreign and domestic firms, reduce the incentive for foreign firms to lobby for property rights protections in the host country thus leading to a stagnating domestic property rights environment. In autocracies, a stagnating domestic property rights regime benefits domestic business elites who can continue to stymie small and medium enterprises (SMEs). The political benefits of BITs, however, decrease as a country becomes more democratic. Using a dataset of developing country leaders over the period 1965-2011, I find support for my hypothesis that BITs are associated with a decreased hazard of losing office and that the effect diminishes with higher levels of democracy. My results highlight the consequences of the legalization of global investment on the domestic political economy.

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“…185 Relying on survey data of some 4 000 firms operating abroad in 48 countries in 1999 -2000, Rodolphe Desbordes and Julien Vauday conclude that foreign and domestic firms share the same degree of political influence and that, given concessions that may have been obtained upon entry, advantages enjoyed by foreign firms over domestic ones do not obsolesce over time. 186 They conclude that 'the bargaining power of foreign firms is generally high enough to outweigh any political liability of foreignness.' 187 We can provisionally conclude, then, that foreign corporate actors within host states with operative representative democracies would not be voiceless and even would be 'represented' in ways similar to those of nationally based corporate actors.…”

mentioning

confidence: 99%

Investing in Democracy? Political Process and International Investment Law

Schneiderman

2010

University of Toronto Law Journal

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International investment law is rushing to stake out the high ground of democratic theory. It has been claimed that the interests of foreign investors ordinarily will not be represented within a host state's political processes and so investors deserve heightened protection from policy decisions that adversely affect investment interests. I argue in the present article that this smuggling of democratic theory and constitutional postulates into international investment law is inapt and, as an empirical matter, inaccurate. By looking to the US origins of political process doctrine, I argue that its invocation by international investment tribunals is inapposite given the doctrine's concern with relegating ordinary economic regulation to relaxed scrutiny. Nor is reference to the European experience all that helpful -representation reinforcement review has not been a hallmark of European jurisprudence. I claim that this worry over democratic processes masks an attempt at legitimating controversial review by investment tribunals of high public-policy matters. Moreover, as empirical studies suggest, this solicitude offered to investors by political process review is mostly unwarranted as foreign corporate actors can and do shape host domestic policy.

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The Political Influence of Foreign Firms in Developing Countries

Cited by 80 publications

References 60 publications

Political Influence of Firms in the Tradables and Non-Tradables Sectors: A Cross-Country Analysis

Political Influence of Firms in the Tradables and Non-Tradables Sectors: A Cross-Country Analysis

Can I stay a BIT longer? The effect of bilateral investment treaties on political survival

Investing in Democracy? Political Process and International Investment Law

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