Foreign Direct Investment and Political Risk in Pacific Rim外文.pdf

ORIGINAL SCIENTIFIC PAPER Foreign Direct Investment and Political Risk in Pacific Rim * Behname Mehdi , Department of Economics of Ferdowsi University of Mashhad (FUM), Mashhad, Iran UDC: 339.727.22 JEL: F21; F23; C31; C33 ABSTRACT – The main purpose of this article is to study the effect of political risk on foreign direct investment in the Pacific Rim. The considered time period is from 1984 to 2008. In this study, 12 indexes of political risk offered by Political Risk Services Group have been used. After studying the stationarity of variables by Im-Pesaran Shin test, the benchmark model is estimated for 12 political risks and we come to the conclusion that the risks of Corruption, External Conflict, Internal Conflict, Investment Profile, and Military in Politics have significant effect on FDI. KEY WORDS: Pacific Rim, foreign direct investment, political risk Introduction Nowadays, besides the phenomenon of globalization, foreign investment attraction has become one of the main concerns of developed and developing countries. Fate of national economies is increasingly getting connected with economies of other nations. The phenomenon of globalization has been the main cause of this fact and nowadays, the condition is so that the politicians have the less control over this matter (Lizentiatsarbeit). Foreign investment not only increases national product and employment, it also affects GNP (Gross National Product) indirectly by overflow of knowledge and technology. It is why the developing countries are trying like the developed countries to attract such capitals in the recent