We develop a new robust-to-outliers dummy estimator that we subsequently apply to investigate the impact of various democratic attributes on foreign direct investment (FDI) in recent years. We find that democracy has generally a positive impact on FDI, once outliers are controlled for, but that this relationship is very specific to each host country’s characteristics.
- foreign direct investment
- categorical variables
- Stahel-Donoho estimate
Desbordes, R., & Verardi, V. (2017). Foreign direct investment and democracy: a robust fixed effects approach to a complex relationship. Pacific Economic Review, 22(1), 43-82. https://doi.org/10.1111/1468-0106.12204