Theoretical Economics Letters

Volume 6, Issue 6 (December 2016)

ISSN Print: 2162-2078   ISSN Online: 2162-2086

Google-based Impact Factor: 0.82  Citations  

FDI Regulatory Reform and Political Beliefs: A Political Economy Approach

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DOI: 10.4236/tel.2016.66114    1,324 Downloads   1,860 Views  
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ABSTRACT

This paper analyzes the setting of a reform towards liberalization of FDI policies as a political compromise pressured by the lobbying of a domestic lobby and a foreign MNC lobby. Using a common agency model of lobbying, we show that, under specific conditions, the interest group’s influence is not distortive for a critical distribution of supporters over non-supporters of the reform. Also, our political economy framework shows that exogenous provision of information on the beneficial effects of FDI liberalization paradoxically weakens the reform process.

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Jaeck, L. and Kim, S. (2016) FDI Regulatory Reform and Political Beliefs: A Political Economy Approach. Theoretical Economics Letters, 6, 1205-1218. doi: 10.4236/tel.2016.66114.

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