Legal system pathways to foreign direct investment in the developing world

Hoon Lee, Glen Biglaiser, Joseph L Staats

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

Building on recent works showing the role that legal institutions can play in attracting foreign capital (Jensen 2003, 2006; Li and Resnick 2003; Li 2006; Biglaiser and Staats 2010; Staats and Biglaiser 2012), and drawing on insights obtained from Powell and Rickard (2010), we use panel data for 114 developing countries from 1970 to 2007 to demonstrate that developing countries with common law legal systems attract greater foreign direct investment (FDI) than countries that have civil law or Islamic legal systems because common law systems are more inclined to promote the rule of law and protect property rights and can be understood to provide more efficiency in the law, better contract enforcement, more judicial autonomy, and more market-oriented regulations.

Original languageEnglish (US)
Pages (from-to)393-411
Number of pages19
JournalForeign Policy Analysis
Volume10
Issue number4
DOIs
StatePublished - Oct 1 2014

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common law
direct investment
legal system
foreign investment
developing country
civil law
constitutional state
right of ownership
autonomy
regulation
efficiency
Law
market

Cite this

Legal system pathways to foreign direct investment in the developing world. / Lee, Hoon; Biglaiser, Glen; Staats, Joseph L.

In: Foreign Policy Analysis, Vol. 10, No. 4, 01.10.2014, p. 393-411.

Research output: Contribution to journalArticle

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