Measuring Risk: Political Risk Insurance Premiums and Domestic Political Institutions.

There is a renewed interest in political science on how political risk affects multinational corporations operating in emerging markets. Most existing studies suffer from data problems where researchers can only offer indirect evidence of the relationship between political institutions and political risk. In this paper I utilize a new data resource to explore how domestic institutions affect political risks for multinationals. Utilizing price data from political risk insurance agencies I test how domestic political institutions affect the premiums multinationals pay for coverage against 1) expropriations and contract disputes and 2) government restrictions on capital transactions. I find that constraints on politicians lead to marginally lower expropriation and transfer risks. Democracy, on the other hand, greatly reduces expropriation risk but has no impact on transfer risk.FDI, political risk, expropriation, insurance

International Institutions and Market Expectations: Stock Price Responses to the WTO Ruling on the 2002 U.S. Steel Tariffs.

Thanks to Nitsan Chorev, Robert Connolly, David Leblang, Quan Li, Andy Mertha, Layna Mosley, Bumba Mukherjee, Eric Reinhardt, Peter Rosendorff, Matthew Slaughter, Andy Sobel, participants of the 2004 Midwest Political Science Association annual meeting and the 2004 Duke Summer Institute on Globalization and Equity for comments and suggestions. Funding for data collection and interviews with WTO legal affairs staff was provided by the Weidenbaum Center on the Economy, Government, and Public Policy at Washington University and other financial support by the UCLA International Institute.World Trade Organization, Tariffs, Trade, Steel, Protectionism

The silence of corruption : identifying underreporting of business corruption through randomized response techniques

Research on the economic consequences of corruption has been hampered by the inability to directly measure corruption. Using an innovative methodology that allows respondents to report individual experiences with corruption while minimizing self-incrimination and an objective diagnostic to evaluate lying (false responses), this paper explores the extent of business corruption in Bangladesh. The analysis shows that traditional measures of corruption underreport the extent of business corruption in Bangladesh and existing strategies to evaluate and elicit truthful responses have limited effectiveness. The authors identify the types of firms that are associated with false responses and nonresponses to survey questions on corruption.Public Sector Corruption&Anticorruption Measures,Bankruptcy and Resolution of Financial Distress,Social Accountability,Corruption&Anticorruption Law,Poverty Monitoring&Analysis

Heard melodies are sweet, but those unheard are sweeter : understanding corruption using cross-national firm-level surveys

Since the early 1990s, a large number of studies have been undertaken to understand the causes and consequences of corruption. Many of these studies have employed firm-level survey data from various countries. While insightful, these analyses based on firm-level surveys have largely ignored two important potential problems: nonresponse and false response by the firms. Treating firms'responses on a sensitive issue like corruption at their face value could produce incorrect inferences and erroneous policy recommendations. We argue that the data generation of nonresponse and false response is a function of the political environment in which the firms operate. In a politically repressive environment, firms use nonresponse and false response as self-protection mechanisms. Corruption is understated as a result. We test our arguments using the World Bank enterprise survey data of more than 44,000 firms in 72 countries for the period 2000-2005 and find that firms in countries with less press freedom are more likely to provide nonresponse or false response on the issue of corruption. Therefore, ignoring this systematic bias in firms'responses could result in underestimation of the severity of corruption in politically repressive countries. More important, this bias is a rich and underutilized source of information on the political constraints faced by the firms. Nonresponse and false response, like unheard melodies, could be more informative than the heard melodies in the available truthful responses in firm surveys.Public Sector Corruption&Anticorruption Measures,Microfinance,Access to Finance,Poverty Monitoring&Analysis,Social Accountability

东道国的哪类政府行为体最易引发投资争端？

外国直接投资者越来越多地运用投资争端解决机制去处理投资争端并降低政治风险。依据主要国际投资仲裁法庭——国际投资争端解决中心(ICSID)的数据，我们对涉及争端的政府行为体及其导致仲裁的行为进行了整理归类。目前关于投资仲裁的案例研究已对引发争端的行为体给出了初步判断，而本文的贡献在于其对不同行为模式进行了系统地归纳

Which host country government actors are most involved in disputes with foreign investors?

Using data on international investment arbitration, the authors catalog the types of state actors involved in disputes and the actions that lead to arbitration. We find that the majority of disputes are the result of actions taken by the executive branch

FDI incentives pay—politically

The authors find that there are strong political benefits to attracting FDI at the state-level in the United States, and that fiscal incentives for attracting such investment, regardless of their effectiveness, may be a strategic political tool for state politicians

Modeling Foreign Direct Investment as a Longitudinal Social Network

An extensive literature in international and comparative political economy has focused on the how the mobility of capital affects the ability of governments to tax and regulate firms. The conventional wisdom holds that governments are in competition with each other to attract foreign direct investment (FDI). Nation-states observe the fiscal and regulatory decisions of competitor governments, and are forced to either respond with policy changes or risk losing foreign direct investment, along with the politically salient jobs that come with these investments. The political economy of FDI suggests a network of investments with complicated dependencies. We propose an empirical strategy for modeling investment patterns in 24 advanced industrialized countries from 1985-2000. Using bilateral FDI flow and stock data, we examine the nature of the networks in relation to a set of covariates - in particular differences in tax rates between pairs of nations. Our statistical model is based on the methodology developed by Hoff (2005), Westveld (2007), Westveld and Hoff (2009b). The model allows the temporal examination of each nation\u27s activity level in investing and attractiveness to investors. Additionally, the model considers the temporal examination of reciprocity between pairs of nations, as well as the notion of clusterability. For both the flow and stock data, there exist a data set based on reports from senders (out-reported-data) and a data set based on reports from receivers (in-reported-data). We extend the model by treating these two data sets as independent replicates (for the flow and stock data separately), conditional on a mean parameter representing an underlying value of FDI, along with random effects within the variance portion of the distribution of the response that allows for discrepancy between the two data points (in and out data). Using a fully Bayesian approach, we also impute the missing data within a MCMC algorithm used to fit the model

A new transfer-matrix algorithm for exact enumerations: Self-avoiding polygons on the square lattice

We present a new and more efficient implementation of transfer-matrix methods for exact enumerations of lattice objects. The new method is illustrated by an application to the enumeration of self-avoiding polygons on the square lattice. A detailed comparison with the previous best algorithm shows significant improvement in the running time of the algorithm. The new algorithm is used to extend the enumeration of polygons to length 130 from the previous record of 110.Comment: 17 pages, 8 figures, IoP style file