EconStor >
Verein für Socialpolitik >
Ausschuss für Entwicklungsländer, Verein für Socialpolitik >
Proceedings of the German Development Economics Conference, 2011 (Berlin) >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/48286
  
Title:Democratic Accountability and the Relative Obstacles to Foreign Investment PDF Logo
Authors:McCann, Fergal
Dorsch, Michael
McGuirk, Eoin
Issue Date:2011
Series/Report no.:Proceedings of the German Development Economics Conference, Berlin 2011 56
Abstract:This paper considers the relationship between democratic accountability in de- veloping countries and the policies they use to attract foreign direct investment (FDI). We isolate two policy areas that governments of developing countries use to attract FDI: the tax burden on firms and the regulatory standards within which they operate. Countries that maintain high business taxes can only attract FDI by offering a less regulated business environment, which may have associated po- litical costs. The extent to which democratic accountability constrains leaders in their tax/regulatory policy choices is our main line of analysis. The novelty of the paper is that it endogenously determines policy choices within a political economy framework that recognizes the trade-offs between attracting FDI and maintaining political control. Examination of firm-level survey data from foreign firms operating in eastern Europe and central Asian economies confirms our model's main conclusion: regulation is seen to be a relatively larger obstacle to doing business in countries with greater democratic accountability.
Document Type:Conference Paper
Appears in Collections:Proceedings of the German Development Economics Conference, 2011 (Berlin)

Files in This Item:
File Description SizeFormat
56_mccann.pdf386.44 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/48286

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.