Does FDI Affect Social Protests Level?: Panel Granger Causality Test

Yıl 2017, Cilt: 1 Sayı: 3, 56 - 67, 30.09.2017

Deniz Güvercin

https://doi.org/10.25295/fsecon.326770

Öz

FDI as an the extension of  foreign economic units has significant
economic and political impacts on host country. The literature focusing on the
political determinants of the FDI inflows does not put emphasis on whether FDI can
redetermine the level of political rights, social protests,  riots in the host country. This study brings
new insight by adding the relevant literature the issue of the impact of FDI on
social protests level in the host countries by bringing the cross country
evidence. I refer in the paper some channels through which FDI can affect
social demonstrations. The main channel, along with others, I emphasize that
if  the growth-enhancing FDI keeps
flowing and creating economic growth, voters get more  motivated to vote for the incumbent party. I
argue that incumbent government to draw benefits out of strong economic record
pumped by FDI inflows, releases the restrictions on the political rights, and
eases the harsh repression to avoid political uncertainty which decreases the
level of collective action problem and increase the social protest levels.
Dumitrescu & Hurlin Panel Granger test is implemented to test FDI-Social
protest causality using the relevant data of six European countries. Test
results indicate that there is bi-directional causality running from FDI to
Social protest level that implies that FDI has an impact on protest level in
the host country.

Anahtar Kelimeler

FDI, Social Protests, Collective Action Problem, Dumitrescu & Hurlin Panel Granger test

Kaynakça

• Borensztein E., J.De Gregorio and J-W Lee, 1998, “How does foreign direct investment affect economic growth”, Journal of International Economics, 45(1), 115-135
• Busse M., Hefeker C., 2005, “Political Risk, Institutions and Foreign Direct Investment,
• HWWA Discussion Paper 315, Hamburg Institute of International Economics
• Dumitrescu I., Hurlin C., 2012, “Testing for Granger non-causality in heterogenous panels”,
• Economic Modelling, 29(4), 1450-1460
• Dutta N., Roy S., 2009, “The Role of Direct Investment on Press Freedom”, Kyklos, 62(2), 239-257
• European Protest and Coercion Data, web.ku.edu/~rofrand/data
• Greider W., 1998, One World, Ready or Not: The Manic Logic of Global Capitalism, Newyork:Touchstone
• Harms P., and Ursprung H., 2002, “ Do Civil and Political Repression Really Boost Foreign Direct Investment”, Economic Inquiry,40(4), 651-663.
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• Kalemli-Ozcan S., Sayek S., Chanda A., Alfaro L., 2004, “FDI and Economic Growth: The Role of Local Financial Markets, Journal of International Economics, 64(1),89-112