Political Regimes and FDI: An Empirical Analysis of the Attractiveness of Hybrid Regimes for Multinational Companies

Abstract

This thesis set out to investigate the relationship between political regime type, and FDI inflow. The academic field has seen a fair amount of research in recent years, but this is usually limited to the likes of democracies and autocracies. I argue that many countries are neither of these two, but find themselves in a political unstable gray zone in between, called hybrid regimes. This thesis draws on a comprehensive dataset ranging from 1980-2010, and by way of time-series cross-section analysis; it sets out to explore the attractiveness of hybrid regimes in relation to FDI inflow. The findings indicate that unstable political regimes do attract MNCs, but that they usually are dependent on natural resources. Hybrid regimes receive more FDI inflow than autocracies, but less than democracies. The thesis also find that the region Africa is special in that hybrid regimes are the biggest recipient of FDI inflow, with natural resources being the main factor. The findings support the former literature saying that democratic conditions attracts MNCs, but also question the alleged democratic transition taking place in a growing oil-dependent world.