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International Capital and Subnational Politics: Partisanship and Foreign Direct Investment in Mexican States

Garriga, Ana Carolina (2021) 'International Capital and Subnational Politics: Partisanship and Foreign Direct Investment in Mexican States.' Political Research Quarterly. p. 106591292110303. ISSN 1065-9129

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Do foreign investors have subnational political preferences? The political economy of foreign direct investment (FDI) involves not only choosing among host countries, but also the subnational location of the assets. However, factors affecting investors’ decisions about subnational location likely differ from the ones affecting international investment. This paper studies the effect of state-level partisanship on new FDI inflows to Mexican states. I argue that investors prefer states ruled by left-wing governors because they are more likely to invest in human capital. Statistical analyses using new data on subnational allocation of FDI in Mexican states between 1999 and 2017 support the main hypothesis. Given the persistence of authoritarian enclaves in Mexico, I also disentangle the effects of partisanship from subnational democratization. The partisan effect is independent from party turnover and political competition at the subnational level, and it is robust to different model specifications and estimation strategies. Additional evidence supports the plausibility of the argued mechanism.

Item Type: Article
Uncontrolled Keywords: Foreign direct investment; Partisanship; Mexico
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Government, Department of
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 06 Oct 2021 13:23
Last Modified: 06 Jan 2022 14:25

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