Foreign Political Instability Research Articles

Foreign Risk, Domestic Problem: Capital Allocation and Firm Performance Under Political Instability

We argue in this paper that firms with foreign operations misallocate capital and underperform when they face political instability abroad. We develop and test a dynamic model of firm capital allocation under foreign political instability. The model shows that as a political regime becomes less stable, independent of whether the regime becomes less business-friendly or more business-friendly, firms invest suboptimally (i.e., they either overinvest or underinvest), and their marginal q’s diverge further from an optimal level. Using elections and textual analysis of local media during national elections, we construct a novel index of political instability. We find that U.S. firms and industries with a greater exposure to election-induced political instability experience disruptions of investment efficiency that lead to lower valuations and lower total factor productivity. Therefore, international trade is a significant conduit of foreign political instability into U.S. markets. The online appendix is available at https://doi.org/10.1287/mnsc.2016.2638 . This paper was accepted by Gustavo Manso, finance.

RETRACTED: Impact of foreign political instability on Chinese exports

This article has been retracted: please see Elsevier Policy on Article Withdrawal ( http://www.elsevier.com/locate/withdrawalpolicy ). This article has been retracted at the request of the Editor-in-Chief and the Publisher. After a thorough investigation, the Publisher has concluded that the Editor was misled into accepting this article based upon the positive advice of at least one faked reviewer report. The report was submitted from a fictitious email account which was provided to the Editor by the corresponding author during the submission of the article. The co-author Dr K. Zaman wishes to take the responsibility for recommending reviewers for this paper. This manipulation of the peer-review process represents a clear violation of the fundamentals of peer review, our publishing policies, and publishing ethics standards. Apologies are offered to the reviewers whose identities were assumed and to the readers of the journal that this deception was not detected during the submission process.

Foreign Risk - Domestic Problem: Trade, Politics, and Capital Allocation

We argue that firms with foreign operations misallocate capital and underperform when they face political instability abroad. We develop and test a dynamic model of firm capital allocation under foreign political instability. The model shows that as a political regime becomes less stable, independently of whether the regime becomes less business-friendly or more business-friendly, firms invest sub-optimally (firms either over-invest or under-invest), and their marginal qs diverge further from an optimal level. Using elections and textual analysis of local media during national elections, we construct a novel index of political instability. We find that U.S. firms and industries with a greater exposure to election-induced political instability experience disruptions of investment efficiency which lead to lower valuations and lower Total Factor Productivity. Therefore, international trade is a significant conduit of foreign political instability into U.S. markets.

Macro Policies, External Forces, and Economic Growth in Sub-Saharan Africa

Previous articleNext article No AccessMacro Policies, External Forces, and Economic Growth in Sub-Saharan AfricaDhaneshwar GhuraDhaneshwar Ghura Search for more articles by this author PDFPDF PLUS Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by Economic Development and Cultural Change Volume 43, Number 4Jul., 1995 Article DOIhttps://doi.org/10.1086/452185 Views: 48Total views on this site Citations: 31Citations are reported from Crossref Copyright 1995 The University of ChicagoPDF download Crossref reports the following articles citing this article:Fekadu Mekonnen Bedhiye, Lakhwinder Singh Fiscal policy and private investment in developing economies: Evidence from Ethiopia, African Journal of Science, Technology, Innovation and Development 4 (Jan 2022): 1–15.https://doi.org/10.1080/20421338.2021.1982664Roberta Bajrami, Adelina Gashi, Kosovare Ukshini, Donat Rexha Impact of the government size on economic growth in the Western Balkan countries, Journal of Governance and Regulation 11, no.11 (Jan 2022): 55–63.https://doi.org/10.22495/jgrv11i1art6JIUN-NAN PAN, MING-LEI CHANG POPULATION AGING, MIDDLE-INCOME TRAP, AND ECONOMIC GROWTH: AN EMPIRICAL STUDY OF ASIAN ECONOMIES, The Singapore Economic Review 66, no.0606 (Apr 2019): 1577–1594.https://doi.org/10.1142/S0217590818420092Sin-Yu Ho, Bernard Njindan Iyke The Determinants of Economic Growth in Ghana: New Empirical Evidence, Global Business Review 21, no.33 (Jul 2018): 626–644.https://doi.org/10.1177/0972150918779282Temidayo Gabriel Apata Public spending mechanisms and gross domestic product (GDP) growth in the agricultural sector (1970–2016): Lessons for Nigeria from agricultural policy progressions in China, Bulletin of Geography. Socio-economic Series 44, no.4444 (Jun 2019): 57–72.https://doi.org/10.2478/bog-2019-0015Dadson Awunyo-Vitor, Ruby Adjoa Sackey Agricultural sector foreign direct investment and economic growth in Ghana, Journal of Innovation and Entrepreneurship 7, no.11 (Nov 2018).https://doi.org/10.1186/s13731-018-0094-3Temidayo Apata, Olugbenga Awoniyi, Sunday Ogunjimi, Olabisi Igbalajobi Nexus of public spending and gross domestic products (GDP) growth in the agricultural sector: Evidence from Nigerian and Malaysian agricultural sector (1976-2016), Business Strategy & Development 1, no.33 (Jun 2018): 158–168.https://doi.org/10.1002/bsd2.19Andrea Guariso, Marijke Verpoorten Aid, trade and the post-war recovery of the Rwandan coffee sector, Journal of Eastern African Studies 12, no.33 (Jun 2018): 552–574.https://doi.org/10.1080/17531055.2018.1480091Georges Harb The economic impact of the Internet penetration rate and telecom investments in Arab and Middle Eastern countries, Economic Analysis and Policy 56 (Dec 2017): 148–162.https://doi.org/10.1016/j.eap.2017.08.009Sefa Awaworyi Churchill, Mehmet Ugur, Siew Ling Yew Does Government Size Affect Per-Capita Income Growth? A Hierarchical Meta-Regression Analysis, Economic Record 93, no.300300 (Dec 2016): 142–171.https://doi.org/10.1111/1475-4932.12307Feride Gönel, Tolga Aksoy Revisiting FDI-led growth hypothesis: the role of sector characteristics, The Journal of International Trade & Economic Development 25, no.88 (Jul 2016): 1144–1166.https://doi.org/10.1080/09638199.2016.1195431Malik Fahim Bashir, Changsheng Xu, Khalid Zaman, Ghulam Akhmat, Muhammad Ikram RETRACTED: Impact of foreign political instability on Chinese exports, Economic Modelling 33 (Jul 2013): 802–807.https://doi.org/10.1016/j.econmod.2013.06.002 Ken Chamuva Shawa, Damiano Kulundu, Francis Mwega Private Investment In Sub-Saharan Africa: a Dynamic Panel Approach, Journal of Economic Research (JER) 17, no.33 (Nov 2012): 247–281.https://doi.org/10.17256/jer.2012.17.3.003Prosper F. Bangwayo-Skeete DO COMMON GLOBAL ECONOMIC FACTORS MATTER FOR AFRICA'S ECONOMIC GROWTH?, Journal of International Development 24, no.33 (May 2010): 304–315.https://doi.org/10.1002/jid.1704Emmanuel Mensah, Joshua Abor, A.Q.Q. Aboagye, Charles K.D. Adjasi Enhancing the Economic Growth of Africa: Does Banking Sector Efficiency Matter?, (Jan 2012): 1–23.https://doi.org/10.1108/S1479-3563(2012)000012B005Rasha Hashim Osman, Constantinos Alexiou, Persefoni Tsaliki The role of institutions in economic development, International Journal of Social Economics 39, no.1/21/2 (Dec 2011): 142–160.https://doi.org/10.1108/03068291211188910Paresh Kumar Narayan, Seema Narayan, Russell Smyth Does democracy facilitate economic growth or does economic growth facilitate democracy? An empirical study of Sub-Saharan Africa, Economic Modelling 28, no.33 (May 2011): 900–910.https://doi.org/10.1016/j.econmod.2010.11.004Simplice A Asongu Finance and Democracy in Africa, SSRN Electronic Journal (Jan 2011).https://doi.org/10.2139/ssrn.2493177Azmat Gani, Michael D. Clemes Services and economic growth in Pacific Island countries, International Journal of Development Issues 9, no.22 (Jul 2010): 113–130.https://doi.org/10.1108/14468951011062327abdullahi d ahmed, sandy suardi SOURCES OF ECONOMIC GROWTH AND TECHNOLOGY TRANSFER IN SUB-SAHARAN AFRICA, The South African Journal of Economics 75, no.22 (Jun 2007): 159–178.https://doi.org/10.1111/j.1813-6982.2007.00116.xNeil Foster Exports, growth and threshold effects in Africa, The Journal of Development Studies 42, no.66 (Jan 2007): 1056–1074.https://doi.org/10.1080/00220380600775027 International Monetary Fund Republic of Congo: Selected Issues and Statistical Appendix, IMF Staff Country Reports 04, no.231231 (Jan 2004): i.https://doi.org/10.5089/9781451808520.002Augustin Kwasi Fosu International Trade and Labour Market Adjustment in Developing Countries, (Jan 2002): 137–156.https://doi.org/10.1057/9781403920188_8J. Love, E. Turner Exports, domestic policy and world markets: a panel study, Journal of International Development 13, no.55 (Jan 2001): 615–627.https://doi.org/10.1002/jid.752 Farhad Noorbakhsh and Alberto Paloni Structural Adjustment and Growth in Sub‐Saharan Africa: The Importance of Complying with Conditionality Noorbakhsh & paloni, Economic Development and Cultural Change 49, no.33 (Jul 2015): 479–509.https://doi.org/10.1086/452512Dhaneshwar Ghura, Barry Goodwin Determinants of private investment: a cross-regional empirical investigation, Applied Economics 32, no.1414 (Nov 2000): 1819–1829.https://doi.org/10.1080/000368400425044Tony Killick 2. Have Africa’s economies turned the corner?, (Apr 2015): 13–32.https://doi.org/10.3362/9781780440774.002Azmat Gani Macroeconomic determinants of growth in the South Pacific island economies, Applied Economics Letters 5, no.1212 (Dec 1998): 747–749.https://doi.org/10.1080/135048598353934Ugo Fasano-Filho Economic policy making in sub-Saharan Africa and IMF involvement, The Quarterly Review of Economics and Finance 36 (Jan 1996): 115–151.https://doi.org/10.1016/S1062-9769(96)90012-5Dhaneshwar Ghura, , Michael T. Hadjimichael, Growth in Sub-Saharan Africa, IMF Working Papers 95, no.136136 (Jan 1995): i.https://doi.org/10.5089/9781451855753.001T. Gries, W. Naudé On Global Economic Growth and the Challenge Facing Africa, (): 7–36.https://doi.org/10.1007/3-7908-1610-8_2