Title: High Profile Crimes and the Political Economy of Foreign Direct Investment in Mexican Municipalities
Date: Wednesday 26 April
Time: 1 – 2.15pm
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Abstract:
In this paper, we explore how High-Profile Political Attacks (HPAs) shape foreign direct investment (FDI) in Mexican municipalities. HPAs are attacks against political officials, usually during the campaign trail. Because these attacks signal the attempt of organized criminal groups (OCGs) to take over the social, economic, and political life of their communities; and because the constitution of regimes of criminal governance can result in a stable and secure investment environment, we argue that foreign investors need not be deterred by HPAs. Moreover, HPAs are usually intermittent and unpredictable, and therefore unlikely to shape multinationals’ strategies. Using an original dataset on HPAs and exploring their impact on sectoral FDI at a level of subnational analysis never explored before, we find that HPAs do not deter foreign investments in a number of sectors. However, we also find that this effect is moderated by whether the establishment of regimes of criminal governance happens in a climate of OCGs competition and fragmentation or rather it is a monopolistic process. In the former case, violence becomes indiscriminate, generalized, and a permanent factor that does negatively affect foreign investments, particularly in the commerce sector. Our research throws new light on the conditions under which organized crime trumps new FDI, contributing to an unsettled debate.
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