Quintin H. Beazer
Assistant ProfessorDepartment of Political Science
Florida State University
email: qbeazer{at}fsu.edu
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What determines whether countries' institutions attract or deter investment? Although existing theories predict that multinational enterprises (MNEs) will avoid locations where institutions cannot constrain the opportunistic behavior of public and private actors, we argue that the attractiveness of host country institutions depends on the institutions that investing firms have encountered at home. By shaping firms' practices and capabilities, home country institutions help determine the institutional environment that firms are best prepared to deal with when investing abroad. Applying this argument specifically to judicial independence, we test our predictions using multiple datasets at different levels of analysis: firm-level data on MNEs' foreign subsidiaries, data on bilateral foreign direct investment (FDI) positions, and longitudinal data on bilateral FDI flows. We find that states with independent judiciaries are particularly attractive to investment from countries also possessing independent courts. Similarly, FDI from countries with low judicial independence goes disproportionately to host countries lacking independent judiciaries.
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The International Monetary Fund (IMF) often seeks to influence countries' domestic public policy via varying levels of conditionality -- linking financial support to borrowing governments' commitment to policy reforms. When does extensive conditionality encourage domestic economic reforms and when does it impede them? We argue that, rather than universally benefiting or harming reforms, the effects of stricter IMF conditionality depend on domestic partisan politics. More IMF conditions can pressure left-wing governments into undertaking more ambitious reforms with little resistance from partisan rivals on the right; under right governments, however, more conditions hinder reform implementation by heightening resistance from the left while simultaneously reducing leaders' ability to win their support through concessions or compromise. Using data on post-communist IMF programs for the period 1994-2010, we find robust evidence supporting these claims, even after addressing the endogeneity of IMF programs via instrumental variables analysis.
What determines whether political centralization helps or hurts economic performance? This paper identifies pre-existing patterns of political competition as a critical factor in determining the impact of political centralization on subnational economies. In competitive regions, political centralization undermines economic performance by removing a functioning electoral mechanism that makes leaders responsive to wide range of economic concerns. In uncompetitive regions, however, centralization encourages economic improvement by reducing leaders' reliance on narrow interests and making previously-unassailable local leaders answerable to central political bosses. I test competing hypotheses about the economic effects of political centralization using a set of Russian regional reforms that removed the direct election of governors in favor of a system of centralized appointments. The data show that, on a number of different dimensions, economic performance suffered after centralizing reforms were adopted in Russia's politically-competitive regions; in contrast, political centralization improved economic performance in those regions where strong incumbent governors had previously depressed political competition.
What determines whether policy environments attract or deter investment? Scholars worried about the vulnerability of market-supporting institutions to political manipulation have identified delegation to independent actors as way to increase policy environments' predictability. Extant arguments, however, risk overgeneralizing from the experience of developed democracies. I argue that investors' response to bureaucratic discretion -- agents' leeway to make decisions and act independently of political bodies -- depends upon the broader institutional context. Where robust political institutions are lacking, bureaucratic discretion acts as a source of unpredictability that deters investors; conversely, political institutions that share the cost of monitoring help to mitigate uncertainty about how bureaucrats will use discretion in applying regulatory rules. Using survey data from over 600 enterprises in Russia, I find that perceptions of bureaucratic discretion are negatively associated with firm managers' willingness to invest; this effect is particularly pronounced in regions where the institutional environment discourages political competition.
Research under review and other working papers are listed here.