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"International Political Economy Panel: New Horizons in FDI"

CIS Faculty Research Panel Series

CIS welcomes Allison Kingsley (University of Vermont) and Stephan Haggard (UC San Diego) to present cutting-edge research in the field of international political economy.
Chair: Joshua Aizenman, USCDiscussant: Andrew Coe, USC  “Information, Speed, and Political Risk: How Capital Flows Differ" Allison Kingsley, University of VermontBenjamin A. T. Graham, USC  
Abstract: Currency transfer and convertibility restrictions are costly to foreign investors. However, not all foreign investors are equally vulnerable to these restrictions. Kingsley and Graham argue that the critical dimensions on which foreign investors vary are their access to local information and the speed with which they can respond to changes in risk. They focus on comparing the two largest segments of international investment: bank debt and foreign direct investment (FDI). Their findings suggest that a country’s political risk climate shapes the population of economic actors. To the extent that governments prefer direct investment to more volatile flows of bank debt, improving government transparency may be an effective means by which governments can attract a more desirable class of foreign capital. "Engaging North Korea: Evidence from Firm-Level Surveys” Stephan Haggard, UC San Diego Abstract: There is a substantial literature on sanctions, but much less on the political economy of engagement. Moreover, much of the work on sanctions and engagement takes a macro approach to their effects, although arguments in favor of engagement are rooted in presumed micro-level processes such as the externalities associated with market interactions. Firm-level surveys of Chinese and South Korean firms doing business in North Korea show ongoing mechanisms of state control over these interactions as well as the political motives of the Chinese and South Korean governments in the engagement process. "Socialist" China takes a more market-oriented approach to interactions with North Korea than "capitalist" South Korea, which subsidizes market exchanges through the Kaesong Industrial Complex.