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