Foreign Investment and Political Regimes

Drawing on three in-depth case studies of oil-rich countries and statistical analyses of 132 countries over three decades, Bayulgen demonstrates that the link between democratization and FDI is nonlinear. Both authoritarian regimes and consolidated democracies have institutional capabilities that, though different, are attractive to foreign investors. Democracies can provide long-term stability, and authoritarian regimes can offer considerable flexibility. The regimes that have started on the road to democracy, but have not yet completed it, tend to have political institutions that provide neither flexibility nor stability. These hybrid regimes, then, also find it relatively more difficult to construct a policy environment that is attractive to foreign investments. These findings have deep implications for the link between democratization and globalization, but also how globalization may affect political, social, and economic development. 'Oksan Bayulgen has written an original and provocative study concerning what makes some investment environments more attractive than others for foreign oil companies. In doing so, she contests the conventional wisdom that oil profits make foreign oil companies impervious to risk and that foreign investors necessarily prefer authoritarian regimes. She argues that foreign investors prefer investment environments that are stable and flexible, neither of which is contingent on regime type. Her focus on Azerbaijan and Russia makes this book an important read for students not only of political economy but also of the postcommunist world.' Pauline Jones Luong, Brown University 'In Foreign Investment and Political Regimes, Oksan Bayulgen offers a clear and elegant theoretical story on the debated relationship between political regimes and foreign direct investment, which is substantiated by rich case- and fieldwork details on the oil sectors of Azerbaijan, Russia, and Norway, as well as statistical evidence from large-N cross-national quantitative tests. The book is an important contribution to the scholarship on the political economy of development and institutions, particularly the FDI-democracy controversy. It is a must-read for students of and practitioners in democratization, development, and international business.' Quan Li, Texas A&M University 'Bridging the disciplines of politics, economics, and business, Bayulgen provides a fine-grain analysis of the role of foreign investment in the development of the oil industry in three very different countries. Her thought-provoking conclusion is that hybrid political regimes are worse than either democracy or authoritarianism, because in such a regime the number of dimensions of uncertainty is increased.' Peter Rutland, Wesleyan University1. Introduction; 2. Political risks in oil investments: a history of antagonistic interdependence; 3. With or without democracy?: the political economy of FDI; 4. Curse or blessing?: effects of FDI on development; 5. Azerbaijan: one-stop shopping; 6. Russia: two-steps forward, one-step back; 7. Norway: icon of stability; 8. Beyond three cases and oil; 9. Conclusion.