Membership has its Privileges - The Effect of Membership in International Organizations on FDI
AbstractWe argue that membership in International Organizations (IOs) is an important determinant of FDI inflows. To the extent that membership restricts a country from pursuing policies that are harmful to investors, it can signal low political risk. Using data over the 1971-2005 period, we find that membership in IOs does indeed increase inflows of FDI. Controlling for the endogeneity of membership, we find this effect to be substantively important and robust to the method of estimation.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3231.
Date of creation: 2010
Date of revision:
membership in international organizations; FDI; investment climate; political risk; signaling; separating equilibrium;
Other versions of this item:
- Dreher, Axel & Mikosch, Heiner & Voigt, Stefan, 2010. "Membership has its privileges: The effect of membership in international organizations on FDI," Center for European, Governance and Economic Development Research Discussion Papers 114, University of Goettingen, Department of Economics.
- F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law
- P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy
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