{"title":"Political affinity, multilateralism, and foreign direct investment worldwide","authors":"Wenlian Lin , Jerry Cao , Sili Zhou , Yong Li","doi":"10.1016/j.intfin.2024.102024","DOIUrl":null,"url":null,"abstract":"<div><p>We investigate the relationship between political affinity and foreign direct investment (FDI) from the perspective of bilateral relations extending to multilateralism. The bilateral analysis shows that a host country can attract more FDI from a home country with which it has high political affinity. Furthermore, we shed new light on the role of multilateralism and find that multilateral diplomacy helps mitigate the effect of bilateral political affinity on FDI through dialog and consultation based on common interests. Finally, we show that a host country’s institutional quality moderates the relationship between political affinity and FDI. Our analysis highlights the importance of multilateralism in the era of political polarization and deglobalization, which threaten the development of international investment.</p></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":null,"pages":null},"PeriodicalIF":5.4000,"publicationDate":"2024-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of International Financial Markets Institutions & Money","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1042443124000908","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
We investigate the relationship between political affinity and foreign direct investment (FDI) from the perspective of bilateral relations extending to multilateralism. The bilateral analysis shows that a host country can attract more FDI from a home country with which it has high political affinity. Furthermore, we shed new light on the role of multilateralism and find that multilateral diplomacy helps mitigate the effect of bilateral political affinity on FDI through dialog and consultation based on common interests. Finally, we show that a host country’s institutional quality moderates the relationship between political affinity and FDI. Our analysis highlights the importance of multilateralism in the era of political polarization and deglobalization, which threaten the development of international investment.
期刊介绍：
International trade, financing and investments, and the related cash and credit transactions, have grown at an extremely rapid pace in recent years. The international monetary system has continued to evolve to accommodate the need for foreign-currency denominated transactions and in the process has provided opportunities for its ongoing observation and study. The purpose of the Journal of International Financial Markets, Institutions & Money is to publish rigorous, original articles dealing with the international aspects of financial markets, institutions and money. Theoretical/conceptual and empirical papers providing meaningful insights into the subject areas will be considered. The following topic areas, although not exhaustive, are representative of the coverage in this Journal. • International financial markets • International securities markets • Foreign exchange markets • Eurocurrency markets • International syndications • Term structures of Eurocurrency rates • Determination of exchange rates • Information, speculation and parity • Forward rates and swaps • International payment mechanisms • International commercial banking; • International investment banking • Central bank intervention • International monetary systems • Balance of payments.
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