1. Introduction; 2. Describing FDI policy through time and space; 3. Financing constraints and liberalized entry; 4. Quantitative tests: financing constraints and liberalization; 5. Quantitative tests: firm and industry level evidence; 6. Comparing Malaysia and Indonesia, 1965–1997; 7. Crisis, reform and policy divergence: Malaysia and Indonesia, 1997–2013; 8. Implications of elite-driven integration.
Demonstrates how large domestic firms push to liberalize foreign direct investment policies to ameliorate financing constraints, often to the detriment of others.
Sarah Bauerle Danzman is an assistant professor of International Studies at Indiana University. She is also a 2019–20 Council of Foreign Relations International Affairs Fellow (working in US government to study the inter-agency foreign investment screening process). She has published in various outlets including International Relations Quarterly and Perspectives on Politics, and consults regularly with the World Association of Investment Promotion Agencies and the World Bank Group on investment promotion policy.
'It is perhaps a truism that countries, firms, and individuals seek
to increase their access to capital. Capital market
liberalization, the opening of markets to inflows and outflows of
capital, has long been seen as a net positive for the local and
global economy. However not all countries and industries are
equally willing and able to liberalize. Sarah Bauerle Danzman makes
an important contribution to our understanding of these dynamics
through the development of an argument that gives pride of place to
the economic and political preferences of interest groups,
politicians, and firms. The theoretical argument in this book
is masterful and the evidence is more than compelling. Merging
Interests is a must read for anyone who is serious about
understanding the global political economy.' David Leblang,
University of Virginia
'Bauerle Danzman's carefully researched book reminds us that
domestic firms require capital, and if they cannot obtain it
domestically, they will seek foreign sources. Capital-constrained
domestic firms are therefore the leading advocates for foreign
direct investment liberalization in many developing countries. The
book, with its mix of quantitative tests and country case studies,
is a welcome contribution to a literature that often overlooks the
dynamics of banking and capital markets.' David A. Singer,
Massachusetts Institute of Technology
'This book on the politics of foreign direct investment
restrictions will be a seminal work in the field. Challenging the
conventional wisdom, Professor Danzman advances an original theory
of when local capital supports the liberalization of foreign
investment laws. Using cross-national statistical analysis as well
as carefully selected case studies, Professor Danzman provides
strong evidence supporting her new and compelling theory.' Nathan
Jensen, University of Texas, Austin, author of Incentives to
Pander
'Sarah Bauerle Danzman deftly navigates the complexities of
corporate finance to explain why large domestic firms, typically
wary of FDI, welcome these investments when they lose preferential
access to capital. In contrast to labor-centric accounts of FDI
liberalization, she anchors the political economy of FDI policy to
broader macroeconomic conditions that make firms support greater
FDI openness. Her account offers valuable new insights on the
politics of FDI regulation, and on how firms adapt to global
economic integration.' Sonal S. Pandya, University of Virginia
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