Date of Award

2012

Degree Type

Open Access Dissertation

Degree Name

Political Science and Economics, PhD interfield

Program

School of Politics and Economics

Advisor/Supervisor/Committee Chair

Jacek Kugler

Dissertation or Thesis Committee Member

Yi Feng

Dissertation or Thesis Committee Member

Mark Abdollahian

Terms of Use & License Information

Terms of Use for work posted in Scholarship@Claremont.

Rights Information

© 2012 Murniz Allen Vasay Coson

Keywords

political capacity, economic growth, foreign investments, developing countries

Subject Categories

Economics | International and Intercultural Communication | Political Science

Abstract

This dissertation will explore how developing provinces within countries attract foreign direct investment. The policy implication to this study is important because it could account for the uneven distribution of growth in developing countries that so frequently leads to dual economies. To attract foreign direct investments, provincial governments compete among themselves trying to appeal to international investors. There is consensus in the economic development literature that both economic and political variables interact to advance a nation's economy. The ability for a country to provide a free market economy to exchange goods and ideas makes the environment more favorable for investors, hence it makes sense to focus on institutions that can attract FDI if the government is committed to developing its economy and compete in the global market. Political factors serves as an important component of strengthening a country's economy. Political variables such as political capacity have helped ensure the success of a growing economy. Governments must possess the ability to extract resources from its people, thereby pursuing policy goals to create a more favorable market environment for investors. Investors then feel more confident and comfortable investing in these economies. This political variable has helped countries redefine themselves in the global community as credible and safe countries for investment. However, this political variable alone is not enough to explain how to attract foreign direct investments in developing countries. Rather, governments must also possess the economic tools necessary, such as economic growth and an open economy. These economic tools combined with political capacity can effectively attract foreign direct investments. Many provinces in developing countries lack these variables, thereby jeopardizing the opportunity to attract foreign direct investments and compete in the global market. Hence, I look at both the political and economical variables as an interaction variable as a strong indicator to attract foreign direct investments. If my work is successful, I hope that these findings can serve as a policy tool for provinces of developing countries to effectively attract foreign direct investments in a competitive global market.

DOI

10.5642/cguetd/16

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