What's the Risk? Bilateral Investment Treaties, Political Risk and Fixed Capital Accumulation. Issue 1 (28th November 2012)

• Record Type: Journal Article
• Authors: Kerner, Andrew; Lawrence, Jane
• Is Part Of: British journal of political science. Volume 44:Issue 1(2014)
• Page Start: 107
• Page End: 121
• Publication Date: 2012-11-28
• Subjects: Political science -- Periodicals; 320.05
• DOI: 10.1017/S0007123412000725
• Languages: English
• ISSNs: 0007-1234

Abstract

<abstract abstract-type="normal"> <title> <x content-type="archive" xml:space="preserve">Abstract</x> </title> <p>This article argues that the political risk associated with foreign direct investment (FDI) is primarily a function of investment in fixed-capital, and not a homogeneous feature of FDI. As such, empirical tests of a political institution's ability to mitigate political risk should focus directly on investments in fixed capital and not on more highly aggregated measures of multinational corporation (MNC) activity, such as FDI flow and stock data that are affected by the accumulation of liquid assets in foreign affiliates. We apply this to the study of bilateral investment treaties (BITs). We find that BITs with the United States correlate positively with investments in fixed capital and have little, if any, correlation with other measures of MNC activity.</p> </abstract>