My research addresses a number of topics within the subfield of international political economy. I have mostly done work on foreign direct investment (FDI) in developing countries, asking questions about the policy and institutional determinants of incoming investment. I am interested in both the quantity and quality of FDI, and how host country initiatives affect the operations of multinational corporations. In the past, I have published work on multinational influence over host country policy and I have considered the relationship between labor rights violations and investment risk. My FDI research involves both large-n econometric analysis of investment patterns and case studies of investment policy in diverse economies in Latin America and on the periphery of Europe.
Beyond FDI, I also have ongoing projects on the political determinants of exchange rate regimes. I have future research agendas involving gulf south trade patterns and historical interpretations of late 19th century monetary politics in the United States.
My current book project examines the relationship between political institutions in developing countries and inflows of innovation-intensive foreign direct investment. Foreign investment, once rare in the developing world, is now an essential ingredient in any country’s growth strategy. Most analyses of FDI in developing countries treat FDI flows and stocks as uniform. However, not all FDI is created equal. Different sectors and firm activities vary widely in their ability to contribute to development processes, and the landscape of global FDI flows is changing. Multinational corporations increasingly locate R&D facilities in developing countries, and competition for innovative FDI is intense. As multinationals seek out global talent and develop ever more complex production chains, developing country governments increasingly seek to attract innovation-intensive forms of investment. What determines whether countries will succeed?
I argue that the policies implemented by developing governments and the investment promotion institutions through which these policies are channeled are crucial for determining the investment profiles of firms. More importantly, I show that adaptive industrial policies which move developing countries to higher value-added activities can be effective even in an era of multinational production. Drawing on large datasets with sector-specific and firm-level investment data, I illuminate the ways in which governments have succeeded and failed in integrating multinational investment into development trajectories. I also include a case study analysis of Ireland, which through the last twenty-five years has managed to attract innovation-intensive FDI. The Irish case, while subtle and complex, illustrates how host country policies and institutions can influence both the character of incoming investment and how firm investment profiles change over time.
The Catalytic Effect of IMF Crisis Lending: Evidence from Sectoral Data (with Michael Breen)
Abstract: Our study contributes to the search for the elusive "catalytic effect" of IMF crisis lending. We argue that a catalytic effect on FDI is more likely in higher value-added sectors, where firms have a greater capacity to respond to economic and political conditions during financial crises. This is a departure from existing studies, which have tended to focus on aggregate FDI flows after crises. We develop a new hierarchy for different forms of FDI, separating investments based on sectoral distinctions and value-added characteristics associated with those distinctions. We utilize data from UNCTAD's Division on Investment Technology and Enterprise Development, which classifies FDI by sector in 60 countries between 1980 and 2010. Because governments only enter IMF programs in particular circumstances, we employ a treatment effects model with a Markov transition in the selection equation. Our results suggest that IMF programs are associated with higher levels of FDI but only in higher value-added sectors. Furthermore, when we disaggregate our IMF program variable into its subtypes, only stand-by and extended fund facility arrangements are associated with higher levels of FDI. We find no evidence of a catalytic effect under the poverty reduction and growth facility, a reminder that many LDCs have difficulty attracting FDI. Our findings are robust to several alternative explanations common in IMF literature, namely the importance of IMF program design and the ability of governments to make credible commitments to reform.
The Political Economy of Agricultural Investment in Developing Countries: FDI as Usual? (with Joe Weinberg)
Abstract: Due in part to the recent volatility in commodity markets, new investment patterns have emerged whereby wealthy countries purchase farmland in the developing world, ostensibly in the interests of domestic food security. While the economic dynamics of agricultural land purchases differ from investment in manufacturing and services, it is unclear if the political dynamics of these investments mirror our traditional understanding of FDI. We apply traditional FDI models to a new World Bank dataset on agricultural land purchases to elucidate the relationship between host and investor countries. Time series analysis of 30 countries suggests some important distinctions about this recent wave of investment. First, we find evidence that agricultural investments have not resulted in greater bargaining leverage for the host country. We attribute this to weak institutional environments among host country governments. Second, we find evidence of strategic selection of farmland investment particularly by the Chinese government. Using UN General Assembly and WTO Ministerial Meeting voting records, we see a potential realignment of political interests between farmland investment partners. We hope that this initial study will shed light on an increasingly important dimension of FDI in land-rich countries.