Political risk and foreign direct investment in Africa: the case of the Nigerian telecommunications industry

Foreign direct investment (FDI) flows are expected to be influenced by political risk factors. However, studies that evaluate the relationship between political risk and FDI flows in Sub-Saharan Africa (SSA) are scarce. This study examines the impact of political risk on FDI flows in a SSA context using the 12 political risk components published as the International Country Risk Guide (ICRG) by the Political Risk Services Group (PRS) with the Nigerian telecommunications sector as a case study. The study finds that political risk has a significant influence on the inflow of FDI into developing economies in SSA such as Nigeria and that the 12 components affect FDI in different ways. Irrespective of the political risk rating, a consistent improvement in composite political risk enhances FDI inflow. Among the 12 components, corruption, law and order, democratic accountability and investment profile were found to have significant influences on FDI inflow into the Nigerian telecommunications sector. Corruption, in particular, explains nearly two-thirds of the FDI inflow

Business Climate, Political Risk and FDI in Developing Countries: Evidence from Panel Data

International audienceThe literature on economic development views institutions as a crucial location advantage of host countries aiming to attract foreign investors. The purpose of the paper is to explore empirically the linkages among political risk, business climate and foreign direct investment inflows and to provide better supported results concerning these linkages. For this purpose, we exploit two panel models: a fixed effect model and a dynamic panel model (the Arellano-Bond GMM estimator) for a data sample of 33 developing and transition countries covering the period 1996-2008 and we identify indicators that count the most for the foreign direct investors. These methodological insights lead to the following main results. Firstly, we show that reduced levels of political risk are associated with an increase in FDI inflows. Secondly, the business operation conditions appear as an important determinant of FDI flows, our results indicating that favourable business conditions participate to an increase of the FDI

Multinational Corporations’ Tax Optimization Strategies and European Union Policies

Multinational companies avoid taxes through sophisticated tax optimization techniques, also known as aggressive tax planning (ATP). This paper serves two purposes: to understand these techniques and to analyze the factors that thwart efforts against ATP by taking the European Union (EU) as a case study. We use an analytic approach based on literature survey. We explain different ATP activities at micro and macro levels. We find that the EU has remained ineffective against tax avoidance due to the lack of legal competences and political will. Finally, we make some recommendations in the current functioning framework of the EU.Les sociétés multinationales évitent les impôts grâce à des techniques d’optimisation sophistiquées appelées également planification fiscale agressive (ATP). Cet article a deux objectifs: comprendre ces techniques et analyser les facteurs qui entravent les efforts contre l’ATP en prenant l’Union européenne (UE) comme étude de cas. Nous utilisons une approche analytique basée sur une étude de la littérature. Nous expliquons les différentes techniques ATP aux niveaux micro et macroéconomique. Nous constatons que l’UE est restée inefficace contre l’évasion fiscale en raison du manque de compétences juridiques et de volonté politique. Enfin, nous faisons quelques recommandations dans le cadre du fonctionnement actuel de l’UE.Las corporaciones multinacionales evitan los impuestos con la ayuda de técnicas sofisticadas de optimización llamadas también planificación fiscal agresiva (ATP). Este articulo tiene dos propósitos: comprender estas técnicas y analizar los factores que frustran los esfuerzos de la Unión Europea (UE) contra ATP como un estudio de caso. Utilizamos un enfoque analítico basado en revisiones bibliográficas. Explicamos diferentes tácticas de ATP a nivel micro y macro. Encontramos que la UE ha permanecido ineficaz contra la evasión fiscal debido a la falta de competencias legales y voluntad política. Finalmente, hacemos algunas recomendaciones en el marco actual de funcionamiento de la UE

FDI, corruption and financial development around the world: A panel non-linear approach

International audienceThe nexus between corruption and FDI has long been examined, but the literature remains inconclusive. Some studies have found that corruption deters FDI while others concluded the opposite. This paper revisits the FDI–corruption nexus by investigating the mediating role of financial development for 80 advanced and emerging economies over the 2003–2019 period. Using panel smooth transition regression and GMM models, we find a non-linear relationship between corruption and FDI driven by the financial development level of the destination country. In the advanced economies, less corruption means more FDI above a corruption threshold, whereas in emerging economies, corruption level is less important as the countries are more tolerant to it. We thus contribute to the extant literature a potential reconciliation of the theories stressing that corruption can ‘sand the wheels’ and ‘grease the wheels’ of FDI. A corrupt environment can, therefore, attract FDI, but is not a prudent long-term option

Dynamique et déterminants des IDE en Russie

attractiveness, foreign direct investments, risk, Russia

International Political Risk Management: Perspectives, Approaches and Emerging Agendas

This paper reviews the extant and emerging perspectives on, and approaches to, political risk management, particularly in the context of foreign direct investment. The authors identify and classify the various theoretical lenses in the domain of political risk management, and suggest a future research agenda. The paper contributes by conceptually categorizing and mapping the extant research onto three approaches to the management of political risk. Through conducting a narrative literature review, the authors suggest three theoretical perspectives on political risk management: institutions; resources and capabilities; and resource dependence. They argue that the institutions approach to political risk management is reactive, responding to external stimuli, whereas the resources- and capabilities-based approach is proactive, preparing and acting in anticipation. The resource dependence domain offers an intermediate approach – the active management of political risk. The authors also suggest that the effectiveness of the domains’ approaches may vary across different national contexts