Investigating the Relationship Between Foreign Direct Investment and Democracy

: Insights from US and Chinese Investment

Abstract

This thesis investigated the relationship between foreign direct investment (FDI) and
democracy, specifically examining whether investment from the United States and China is
associated with a change in the level of democracy in recipient nations. To achieve this, we
employed a Generalised Methods of Moments (GMM) estimator, using panel data covering a
17-year period for China and a 38-year period for the United States. For China, we detected a
significant negative relationship between FDI and democracy, suggesting that an increase in
Chinese FDI may be associated with a decrease in the level of democracy in recipient nations.
By contrast, for the United States, no significant relationship was detected between FDI and
democracy, implying that investment from the United States is not associated with changes in
democratic levels in these countries. We conclude by discussing the implications of these
findings and suggest directions for future research.

Date of Award	18 Jun 2024
Original language	English
Awarding Institution	University of Bristol
Supervisor	Stephan Lewandowsky (Supervisor)