Beyond the Democratic Advantage: Political Regime Similarity and Bilateral Investment - Replication code/dataset

Description

Replication code & dataset for the research note: Beyond the Democratic Advantage: Political Regime Similarity and Bilateral Investment Abstract Research has often examined whether democracies attract more capital than autocracies. This research note argues that the focus on a simple democratic-advantage account is insufficient because foreign investment is patterned by political regime compatibility between source and destination countries. Similar regimes tend to organize authority, accountability, market governance, and state–business relations in comparable ways, reducing information, adaptation, and transaction costs for investors. To examine the association between regime similarity and bilateral foreign direct and portfolio investment positions, this study augments financial gravity models by constructing a novel set of regime-pair dummies in a dyadic panel of up to 176 countries from 2001 to 2017. The results show that same-regime dyads hold significantly higher bilateral investment positions than mixed-regime dyads, especially liberal-democracy dyads and closed-autocracy dyads. These findings challenge the idea that democracies generally attract more capital and indicate that regime similarity is an underappreciated correlate of investment patterns in the contemporary global political economy.

Steps to reproduce

see txt file "1_Description"

Institutions

• Universidad EAFIT

  Medellin

Categories

Licence