IDEAS home Printed from https://ideas.repec.org/a/sae/jocore/v64y2020i5p987-1006.html
   My bibliography  Save this article

Political Risk Insurance: A New Firm-level Data Set

Author

Listed:
  • Vincent Arel-Bundock
  • Clint Peinhardt
  • Amy Pond

Abstract

When do governments impose costs on foreign firms? Many studies of foreign direct investment focus on incentives for government expropriation, but scholars are often forced to rely on indirect measures of expropriation to conduct empirical analyses. This article introduces a data set which includes information on over 5,000 political risk insurance contracts issued by the US Overseas Private Investment Corporation since 1961, and on all the claims filed by investors under these contracts. These detailed insurance data allow us to study the determinants of foreign investors’ losses from a variety of sources, including expropriation, inconvertibility, and violent conflict. To illustrate the benefits of these data for hypothesis testing, we adopt a comprehensive empirical approach and explore both shared and distinct causes across risk categories.

Suggested Citation

  • Vincent Arel-Bundock & Clint Peinhardt & Amy Pond, 2020. "Political Risk Insurance: A New Firm-level Data Set," Journal of Conflict Resolution, Peace Science Society (International), vol. 64(5), pages 987-1006, May.
    • Handle: RePEc:sae:jocore:v:64:y:2020:i:5:p:987-1006
    DOI: 10.1177/0022002719875754
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0022002719875754
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0022002719875754?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters, in: This Time Is Different: Eight Centuries of Financial Folly, Princeton University Press.
    2. Strange,Susan, 1996. "The Retreat of the State," Cambridge Books, Cambridge University Press, number 9780521564298.
    3. Yong Kyun Kim, 2017. "States Sued: Democracy, the Rule of Law, and Investor-State Dispute Settlement (ISDS)," International Interactions, Taylor & Francis Journals, vol. 43(2), pages 300-325, March.
    4. Sergei Guriev & Anton Kolotilin & Konstantin Sonin, 2011. "Determinants of Nationalization in the Oil Sector: A Theory and Evidence from Panel Data," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 27(2), pages 301-323.
    5. Sergei Guriev & Konstantin Sonin & Anton Kolotilin, 2007. "Determinants of Expropriation in the Oil Sector: A Theory and Evidence from Panel Data," Working Papers w0115, New Economic School (NES).
    6. Lucas, Robert E, Jr, 1990. "Why Doesn't Capital Flow from Rich to Poor Countries?," American Economic Review, American Economic Association, vol. 80(2), pages 92-96, May.
    7. Reinhart, Karmen & Rogoff, Kenneth, 2009. ""This time is different": panorama of eight centuries of financial crises," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 77-114, March.
    8. Nathan W. Freeman, 2013. "Domestic Institutions, Capacity Limitations, and Compliance Costs: Host Country Determinants of Investment Treaty Arbitrations, 1987--2007," International Interactions, Taylor & Francis Journals, vol. 39(1), pages 54-78, January.
    9. Garrett, Geoffrey, 1998. "Global Markets and National Politics: Collision Course or Virtuous Circle?," International Organization, Cambridge University Press, vol. 52(4), pages 787-824, October.
    10. Strange,Susan, 1996. "The Retreat of the State," Cambridge Books, Cambridge University Press, number 9780521564403.
    11. Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "This Time is Different: A Panoramic View of Eight Centuries of Financial Crises," Annals of Economics and Finance, Society for AEF, vol. 15(2), pages 215-268, November.
    12. Christopher Hajzler, 2012. "Expropriation of foreign direct investments: sectoral patterns from 1993 to 2006," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(1), pages 119-149, April.
    13. Allee, Todd & Peinhardt, Clint, 2011. "Contingent Credibility: The Impact of Investment Treaty Violations on Foreign Direct Investment," International Organization, Cambridge University Press, vol. 65(3), pages 401-432, July.
    14. Biglaiser, Glen & Staats, Joseph L., 2012. "Finding the “Democratic Advantage†in Sovereign Bond Ratings: The Importance of Strong Courts, Property Rights Protection, and the Rule of Law," International Organization, Cambridge University Press, vol. 66(3), pages 515-535, July.
    15. Johns, Leslie & Wellhausen, Rachel L., 2016. "Under One Roof: Supply Chains and the Protection of Foreign Investment," American Political Science Review, Cambridge University Press, vol. 110(1), pages 31-51, February.
    16. Michael S Minor, 1994. "The Demise of Expropriation as an Instrument of LDC Policy 1980-1992," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 25(1), pages 177-188, March.
    17. Emin Dinlersoz & Sebnem Kalemli-Ozcan & Henry Hyatt & Veronika Penciakova, 2018. "Leverage over the Life Cycle and Implications for Firm Growth and Shock Responsiveness," NBER Working Papers 25226, National Bureau of Economic Research, Inc.
    18. World Bank, 2017. "World Development Indicators 2017," World Bank Publications - Books, The World Bank Group, number 26447, December.
    19. Kalemli-Özcan, Sebnem, 2018. "Leverage over the Life Cycle and Implications for Firm Growth and Shock Responsiveness," CEPR Discussion Papers 13337, C.E.P.R. Discussion Papers.
    20. Abdul Abiad & Ashoka Mody, 2005. "Financial Reform: What Shakes It? What Shapes It?," American Economic Review, American Economic Association, vol. 95(1), pages 66-88, March.
    21. Pelc, Krzysztof J., 2017. "What Explains the Low Success Rate of Investor-State Disputes?," International Organization, Cambridge University Press, vol. 71(3), pages 559-583, July.
    22. World Bank, 2016. "World Development Indicators 2016," World Bank Publications - Books, The World Bank Group, number 23969, December.
    23. Li, Quan & Resnick, Adam, 2003. "Reversal of Fortunes: Democratic Institutions and Foreign Direct Investment Inflows to Developing Countries," International Organization, Cambridge University Press, vol. 57(1), pages 175-211, January.
    24. Abdul Abiad & Ashoka Mody, 2005. "Financial Reform: What Shakes It? What Shapes It?," American Economic Review, American Economic Association, vol. 95(1), pages 66-88, March.
    25. Nathan M. Jensen & Daniel J. Young, 2008. "A Violent Future? Political Risk Insurance Markets and Violence Forecasts," Journal of Conflict Resolution, Peace Science Society (International), vol. 52(4), pages 527-547, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chunfang Cao & Xiaoyang Li & Guilin Liu, 2023. "Does geopolitical risk matter for corporate investment decisions? Evidence from cross‐border acquisitions," Economics and Politics, Wiley Blackwell, vol. 35(3), pages 665-695, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nathan M. Jensen & Noel P. Johnston & Chia-yi Lee & Hadi Sahin, 2020. "Crisis and contract breach: The domestic and international determinants of expropriation," The Review of International Organizations, Springer, vol. 15(4), pages 869-898, October.
    2. Thanh C. Nguyen & Vítor Castro & Justine Wood, 2022. "Political environment and financial crises," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 417-438, January.
    3. Akhtaruzzaman, M. & Berg, Nathan & Hajzler, Christopher, 2017. "Expropriation risk and FDI in developing countries: Does return of capital dominate return on capital?," European Journal of Political Economy, Elsevier, vol. 49(C), pages 84-107.
    4. Jihad Dagher, 2018. "Regulatory Cycles: Revisiting the Political Economy of Financial Crises," IMF Working Papers 2018/008, International Monetary Fund.
    5. Luca Papi & Andrea F Presbitero & Alberto Zazzaro, 2015. "IMF Lending and Banking Crises," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 63(3), pages 644-691, November.
    6. Agnello, Luca & Sousa, Ricardo M., 2015. "Can re-regulation of the financial sector strike back public debt?," Economic Modelling, Elsevier, vol. 51(C), pages 159-171.
    7. Daniel Hansen, 2023. "The democratic (dis)advantage: The conditional impact of democracy on credit risk and sovereign default," Economics and Politics, Wiley Blackwell, vol. 35(1), pages 356-410, March.
    8. Orkun Saka & Yuemei Ji & Paul De Grauwe, 2021. "Financial Policymaking after Crises: Public vs. Private Interests," CESifo Working Paper Series 9131, CESifo.
    9. Saka, Orkun & Ji, Yuemei & De Grauwe, Paul, 2021. "Financial policymaking after crises : Public vs. private interests," BOFIT Discussion Papers 10/2021, Bank of Finland, Institute for Economies in Transition.
    10. Jeffrey M. Chwieroth & Timothy J. Sinclair, 2013. "How you stand depends on how we see: International capital mobility as social fact," Review of International Political Economy, Taylor & Francis Journals, vol. 20(3), pages 457-485, June.
    11. Joseph Joyce, 2011. "Financial Globalization and Banking Crises in Emerging Markets," Open Economies Review, Springer, vol. 22(5), pages 875-895, November.
    12. Müller, Karsten, 2019. "Electoral cycles in macroprudential regulation," ESRB Working Paper Series 106, European Systemic Risk Board.
    13. Saka, Orkun & Ji, Yuemei & De Grauwe, Paul, 2020. "Financial policymaking after crises: public vs. private interests," LSE Research Online Documents on Economics 118861, London School of Economics and Political Science, LSE Library.
    14. Saka, Orkun & Ji, Yuemei & De Grauwe, Paul, 2021. "Financial policymaking after crises: Public vs. private interests," BOFIT Discussion Papers 10/2021, Bank of Finland Institute for Emerging Economies (BOFIT).
    15. Campos, Nauro F. & De Grauwe, Paul & Ji, Yuemei, 2023. "Structural reforms and economic performance: the experience of advanced economies," LSE Research Online Documents on Economics 120870, London School of Economics and Political Science, LSE Library.
    16. De Grauwe, Paul & Saka, Orkun & Ji, Yuemei, 2020. "Financial Policymaking after Crises: Public vs. Private Interest," CEPR Discussion Papers 15413, C.E.P.R. Discussion Papers.
    17. Puspa Amri & Apanard P. Angkinand & Clas Wihlborg, 2011. "International comparisons of bank regulation, liberalization, and banking crises," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 3(4), pages 322-339, November.
    18. repec:zbw:bofitp:2021_010 is not listed on IDEAS
    19. Michael Tomz & Mark L.J. Wright, 2013. "Empirical Research on Sovereign Debt and Default," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 247-272, May.
    20. Reinhart, Carmen M. & Reinhart, Vincent & Rogoff, Kenneth, 2015. "Dealing with debt," Journal of International Economics, Elsevier, vol. 96(S1), pages 43-55.
    21. Christopher Hajzler & Jonathan Rosborough, 2016. "Government Corruption and Foreign Direct Investment Under the Threat of Expropriation," Staff Working Papers 16-13, Bank of Canada.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:jocore:v:64:y:2020:i:5:p:987-1006. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://pss.la.psu.edu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.