Educated dictators attract more foreign direct investment |
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| Affiliation: | 1. LEM (UMR 9221), University of Lille, France;2. Centre d''Etude de la Vie Politique, Université Libre de Bruxelles, Belgium;3. EM Strasbourg Business School, University of Strasbourg, France;4. Moscow State Institute of International Relations (MGIMO University), Russia;1. Mercator Research Institute on Global Commons and Climate Change (MCC), EUREF Campus 19, Torgauer Str. 12-15, Berlin 10829, Germany;2. IZA, Bonn, Germany;3. Leibniz Institut für Ost- und Südosteuropaforschung (IOS), Landshuter Str. 4, Regensburg 93047, Germany;4. Department of Economics, University of Bologna, Strada Maggiore 45, Bologna 40125, Italy;5. National Research University Higher School of Economics, Moscow, Russia;1. Institute of Advanced Research, Key Laboratory of Mathematical Economics of Ministry of Education, Shanghai University of Finance and Economics, 111 Wuchuan Road, Shanghai, 200433, China;2. Institute for Economic and Social Research, Jinan University, No. 601, West Huangpu Avenue, Guangzhou 510632, China;1. Asian Development Bank, No. 6 ADB Avenue, Mandaluyong City 1550 Philippines;2. Department of Economics, University of Messina, Piazza Pugliatti 1, 98122 Messina, Italy;1. Department of Agricultural and Resource Economics, University of California at Berkeley, United States;2. The Paul and Marcia Wythes Center on Contemporary China, Princeton University, United States;3. School of Economics and Management, The Chinese University of Hong Kong, Shenzhen, China;4. Guanghua School of Management, Peking University, China |
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| Abstract: | Since political risk is greater in dictatorships than in democracies, this paper investigates the hypothesis that foreign investors scrutinize public information on dictators to assess this risk. It checks whether foreign investors use five relevant dictators’ characteristics: age, political experience, education level, education in economics, and prior experience in business. The study is performed on a sample of 100 dictatorial countries from 1973 to 2008. We find that educated dictators are more attractive to foreign investors. We obtain strong evidence that greater educational attainment of the leader is associated with higher FDI. We also find evidence that the leader having tertiary education in economics and prior experience in business is associated with greater FDI. By contrast, the leader's age, and political experience have no relationship with FDI. |
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