IR 213 Lecture Notes - Lecture 16: Foreign Corrupt Practices Act, Chiquita Brands International, Labor Rights
6 Apr 2016
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Document Summary
Lucas paradox: capital flows from poor countries to rich countries, not other way around: main story = political risk. Role of political institutions in creating comparative advantage. Creeping expropriation: adverse changes in tax rates or regulations that reduce the values of a firm"s invested assets. This is a really broad category: includes transfer risk. 3 categories of political risk: policy risk, bureaucratic risk, risk of political violence. Risk of adverse policy change at the national level: increased taxes, new regulations, changes to government contracts, outright expropriations. What kind of countries: countries with unconstrained executives are risky. Veto players: critical social science concept, veto player = someone who can veto a change to the status quo, simple logic: more veto players = more stable status quo. Risk imposed by bureaucrats and local officials: corruption, inefficient civil courts, inefficient customs processing, excessive red tape, what kind of countries: Civil servants that are undertrained, underpaid, and/or.
