@article{ref1,
title="Investing in violence: foreign direct investment and coups in authoritarian regimes",
journal="Journal of politics",
year="2017",
author="Tomashevskiy, Andrey",
volume="79",
number="2",
pages="409-423",
abstract="Why do foreign investors invest in authoritarian regimes despite higher political risks? In this paper, I evaluate the relationship between foreign direct investment (FDI), coups, and political risk. I develop a formal model of leadership dynamics in authoritarian regimes and examine how the initial investment decision by foreign investors is affected by expected likelihood of coups. Using the formal model, I discriminate between diverging predictions made by the &quot;greed&quot; and &quot;patronage&quot; models of authoritarian regime dynamics. Accounting for both the &quot;greed&quot; and &quot;patronage&quot; mechanisms, I demonstrate that patronage effects predominate and that increasing FDI reduces the risk of a coup. Investors are more likely to send larger FDI amounts to authoritarian states when coup risk is high to increase the likelihood of a peaceful patronage equilibrium. Using a large-n test, I find that FDI reduces the likelihood of coups, while higher coup risk is associated with increased FDI in less mobile sectors.<p /> <p>Language: en</p>",
language="en",
issn="0022-3816",
doi="10.1086/688356",
url="http://dx.doi.org/10.1086/688356"
}