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Autocratic Leadership Turnover and Foreign Direct Investment: Empirical Analysis.

In the current age of globalization, scholarly efforts have been put into understanding the relationship between foreign direct investment (FDI) and politics. Some studies argue that FDI inflows can increase with the levels of democracy (Choi, 2009; Jensen, 2008; 2003). Others differ by emphasizing that institutional factors, such as the rule of law, property rights protection, and checks and balances attract foreign investors, namely multinational corporations, rather than a democratic regime per se (Zheng, 2011; Li, 2009; Li & Resnick, 2003; Henisz, 2000). Buthe and Milner (2008) show little effect of the political regime, the levels of political constraints, and freedom scores. They instead find that preferential trade agreements raise the net inflows of FDI because the signing of such agreements signals the commitment of a host country to maintain a stable policy environment necessary for profitable investment (Li, 1999). Bevan and Estrin (2004) demonstrate membership in the European Union (EU) as an important factor for foreign investors to decide where to invest in Eastern Europe.

Despite the relative disagreements over the primary factors that affect inward FDI and their diversification in research focus, these studies provide valuable insight that FDI tends to increase in places where there exists lower political risk (Fails, 2014; Zheng, 2011). Whether political risk is reduced through a political regime itself, institutional factors, or membership in international agreements, studies seem to concur that foreign investors will invest more in countries with political aspects which minimize the fear of losing their assets or being expropriated. Our research applies this logic of political risk to explain the variation in the amount of FDI inflows among autocratic nations. We particularly examine how different types of leadership turnover in autocratic states affect the levels of political risk and consequently the net amount of FDI inflows.

There are mainly two reasons this research is important for enhancing the current understanding of FDI in the study of political economy. First, the previous literature has advanced our understanding in such a way that one should not analyze states' ability to attract FDI solely based on the dichotomous distinction between democracy and autocracy. However, that distinction remains an important analytical variable, as the sort of political regime is a good theoretical starting point to understand the mechanism behind how political risk matters to FDI. As such, our deeper concern is that very little attention is paid to the "immense variation" in FDI inflows within autocracies compared to democracies, as autocracies continue to receive a considerable and growing amount of FDI in the current age of globalization (See also Figure 1) (Fails, 2014, 372; Zheng 2011; Mottaleb & Kalirajan, 2010). This research helps shed light on the autocratic variation.

Second, some studies have begun to reveal that leadership turnover is an important factor that affects the levels of political risk, particularly in autocracies (Fails, 2014; Li, 2009). In democracies, leadership change may be a less salient factor affecting political risk because such an event is expected to occur given the fixed terms of presidents or deliberate steps taken by a ruling party to replace prime ministers. By contrast, leadership change in autocracy without "regular constitutional opportunities for changing the governing officials" can be an unexpected event (Li, 2009; Lipset, 1960, 27). In addition, leaders are less constrained by institutional factors and able to reflect personal goals and interests in policies. Consequently, shifts in autocratic leadership create uncertainty regarding the investment climate (Fails, 2014; Li, 2009). In short, leadership turnover is an important factor that not only changes the levels of political risk but also matters specifically to the inflow of FDI in autocratic states.

The central argument of this paper maintains that the net amount of FDI flowing into these economies depends on the types of leadership turnover that occur in these autocratic states because each type of leadership change comes with different levels of political risks. Some autocratic nations may expect regular replacement of their leaders, such as an anticipated successor taking power after an incumbent leader either steps down or dies. While this kind of change is still likely to temporarily destabilize the investment environment of a country, political risk may not be as high as others that experience unconventional leadership disposal through coups d'etat, civil wars, and assassinations. These 'irregular exits' of leadership may be more likely than the 'regular exits' of autocratic leadership to heighten foreign investors' fear of being expropriated regardless of a government's intentions; and ultimately the FDI inflows may significantly be reduced in these situations.

In other words, we theorize and empirically demonstrate that the amount of FDI inflows tends to decrease when an autocratic nation goes through 'irregular exits' of leaders. In addition, the negative effect of irregular exits of leadership is stronger in the case of assassination than that of non-foreign-supported events. These findings are novel in the literature of FDI but are consistent with existing research such as Fails (2014) and Li (2009) linking the variations in political risk for expropriation and the amount of FDI inflows.

Literature Review: Political Risk and FDI

The growing body of literature on FDI suggests the level of political risk of a recipient country is an important factor for foreign firms seeking to invest in the country. To define political risk, we mean the condition of policy stability or the credibility of a hosting government with regard to the probability of expropriation--whether FDI becomes a sunk cost due to unexpected policy changes by the government reneging on contract terms negotiated with foreign investors.

This risk is more or less existent in any foreign investment situation due to the changing power relationship between investors and host nations over time. According to the obsolescent bargaining theory, multinational corporations are initially more powerful than host countries over the negotiation of investment because the corporate actors get to determine where to place their investment (Vernon 1977). They can also bargain with the potential host country for benefits, such as free land, tax breaks, guarantees against expropriation, income tax holidays, duty exemptions, subsidies, market preferences, guarantees of infrastructure development, and a plethora of other benefits, even the right to hold a monopoly within the borders of the host country (Bouoiyour, 2004). However, once the investment decision has been made, the bargaining power of multinational corporations diminishes or becomes "obsolescent," as it says the obsolescent bargaining theory. Political leaders of the host country can do as they will; this ranges from canceling the benefits promised to the investors, raising tax rates, to even complete expropriation (Li, 1999). Hence, it is critical for foreign investors to assess the degree of political risk and profitability prior to financing operations abroad by looking at a country's political regime, institutions, and the leaders' reputation in the hosting nations.

As such, the literature shows that a democratic regime exhibits a relatively smaller amount of political risk and attracts more FDI for a number of reasons. Bueno de Mesquita et al. (2005) argue that the survival of democratic leaders in office is dependent upon a large portion of population. Therefore those leaders tend to choose policies that serve as public goods--policies beneficial for the majority of voters (Bueno de Mesquita et al., 2004; Bueno de Mesquita, 2005). Foreign investors can expect this kind of a country to have a stable investment climate since FDI has increasingly become thought of as public good that can boost economic development and growth of a host country, which is often a developing nation (Zheng, 2011; Mottaleb & Kalirajan, 2010).

Second, democratic nations appear to receive more FDI because these nations are closely associated with institutions such as checks and balances, audience costs (4), transparency, congressional veto players (5), strong rules of law, and property rights protection (Fails, 2014; Zheng, 2011; Souva et al., 2008; Li & Resnick, 2003; Jensen, 2003; Henisz, 2000; North & Weingast, 1989). To be specific, studies differ on whether it is the strength of these institutions or the strength of the relationship between a democratic regime and institutional factors that affects FDI inflows (Choi, 2009; Souva et al., 2008; Li & Resnick 2003; Simmons, 2000). However, they seem to agree that those factors, combined or separately, work to reduce the levels of political risk by limiting the ability of leaders to make radical changes in the policy environment as well as to threaten investors with possible expropriations (Fails, 2014).

Conversely, autocracies are prone to have greater political risk (Li, 2009; Jakobsen & Soysa, 2006; Jensen, 2003; Olson, 1993). This tendency may result from the absence of the discussed institutional factors in autocratic states. An autocratic nation often lacks the institutional constraints that provide protection for physical assets and a stable investment climate. Selectorate theory also explains that larger political risk in autocracies exists because there is a greater possibility of expropriation. Since autocratic governments have a smaller winning coalition, the political regime is based on private goods, not public. This means that autocratic leaders are capable of implementing any policies that serve the interests of their own or a small group of supporters. For example, military leaders who "seize power from a civilian dictatorship in a coup d'etat ... may find that they can maximize their own time in office by devoting a larger share of the budget to defense spending, rather than to the private goods that the previous dictator employed to maintain his own support" (Fails, 2014, 374). As a result, it is more feasible that policymakers in autocracies could renege on their commitment to protect FDI, increasing the possibility of investors losing their assets. Especially when leaders or incumbent governments intend to only stay in power for a short term, these actors may choose to take immediate gains from expropriation, "applied to strengthen the leader's political position" (Li, 2009, 1104).

Theory: Leadership Turnover, Political Risk, and FDI in Autocracy

In this section, we apply the concept of political risk to explain the relationship between the amount of FDI inflows and autocratic nations. Once again, the existing literature reminds us that a political regime alone is not a paramount factor affecting FDI inflows, but it has also suggested that autocracies tend to come with greater political risks. Meanwhile, a few studies have focused on a "tremendous variation within autocracies," which needs more explanation (Fails 2014, 370; Mottaleb & Kalirajan, 2010). After briefly discussing relevant research, we demonstrate how different types of leadership turnover in autocratic states affect the levels of political risk and hence the net amount of FDI.

There are a few prior studies that have focused on autocratic nations and specifically leadership turnover. Li (2009) finds that the length of autocratic leadership tenure influences the amount of expropriation that occurs in the host country. This is because a leader planning to stay in power for the long term is more likely to offer better property rights protection than leaders staying for short term. The leader with a longer time horizon may refrain from expropriating so that he can benefit from foreign capital during his tenure (Li, 2009; Clague et al., 1996). On the other hand, as we mentioned, autocratic governments or leaders that only intend to stay in power for a short run are more likely to expropriate and benefit from immediate gains (Li, 2009). Fails (2014) demonstrates that differences in leadership turnover frequency in autocracies lead to more political volatility, which leads to greater economic risk and possibly the depression of FDI inflows.

In this research, we focus on another aspect of autocratic leadership--that is--the types of leadership turnover. (6) We contend that the net amount of FDI inflows is more likely to decrease when autocratic leadership turnover occurs unconventionally than conventionally. By conventionally, we mean a regular replacement of autocratic leaders, such that an anticipated successor would take power after the leader in power either steps down or dies (Fails 2014, 376). In other words, this type of leadership change includes the cases of a relative or confidant taking control of the government after the passing of the leader (e.g. Raul Castro in Cuba and King Fahd bin Abdulaziz Al Saud in Saudi Arabia) and cases of fraudulent elections that put into power a person of the current leaders' choosing (e.g. Dmetri Medvedev in Russia and Hu Jintao of China). Unconventional leadership change or 'irregular exit' of autocratic leadership refers to unexpected leadership turnover, often accompanied by public discontent which could lead to rioting, national economic distress, or even internal conflict such as civil war (Beger et al., 2014). Put differently, an irregular leadership change can be defined as any transition in leadership that was achieved by any means that circumvents the conventions and customs of the state in question (Goemans et al., 2009).

We further identify three types of unconventional leadership turnover: foreign-supported, non-foreign-supported, and assassination. First, foreign-supported leadership turnover occurs where new leadership is installed by a foreign entity (e.g. the United States in Iraq in 2003). Second, non-foreign-supported turnovers are defined by coups d'etat or civil wars that overthrow a sitting government (Goemans et al., 2009). Recent examples of this type may be found in Egypt with the 2011 overthrow of Hosni Mubarak or in Tunisia with the overthrow of Ben Ali. Assassination of a state's leader is another category of an irregular exit of autocratic leadership. Given these types, we outline our expectations of how each type affects FDI inflows.

Starting with 'regular exits' of autocratic leadership, these types can be relatively predictable and peaceful transitions of power. When the nation is at peace, leaders are also more likely to keep a similar set of policies to maintain the political and economic structures of the state. Thus, the regular exit of an autocratic leader resembles a democratic environment where the similar menu of policies is used to satisfy a nearly identical size and group of a winning coalition during the transfer of power. By contrast, while autocracies are "more than five times as likely as their democratic peers to suffer such irregular exits from power," unconventional leadership turnovers are prone to involve violence and create a politically volatile and dangerous situation for all involved actors, including foreign investors (Fails, 2014, 375).

In considering the hierarchy of investor risk assessments, we expect foreign-supported unconventional leadership change to be an investor's second best option after regular turnover. This may be so especially when an economic powerhouse such as the United States inserts itself into an autocratic state to change the regime. Individual investors or multinational corporations from this Western industrialized country would "follow the flag" knowing that their interests will be protected by the state that initiated the foreign-supported turnover (Biglaiser & DeRouen, 2007). In addition, this type of leadership turnover may have a more visible and predictable outcome in the eyes of investors than other 'irregular exits' because foreign state actors are capable of updating the status of the process of establishing new leadership through public mass media or private meetings.

Non-foreign supported 'irregular' turnovers like a coups d'etat tend to involve more political risks than foreign-supported. This may be the case because when the people desperately want a change in leadership, and they may be willing to use violent means that create a politically and economically volatile situation. In fact, the state's financial institutions are typically most at risk because they are often perceived as the largest threat to equality in the country and are also often perceived as wanting to maintain the status quo, which the state's antagonists are clearly attempting to transform. This fact also adds to the perception of risk for foreign firms investing in the state (Gandhi & Przeworski, 2006).

The assassination of a state's leader almost always causes widespread economic, political, and cultural upheaval. Worse yet, autocracies appear to be particularly susceptible to this form of leadership change. Scholars have provided evidence that successful assassination in autocracies causes far greater disruption in the prevailing political-economic institutions than assassinations in democracies (Jones & Olken, 2009). Furthermore, studies of African states' assassinations provide evidence that this type of turnover leads to serious FDI outflows (Asiedu, 2006). We thus posit that assassinations provide the worst investment climate for potential investors. This type of leadership change is placed at the bottom of the investment calculus hierarchy. (7)

Our argument can be summarized as follows. The net amount of FDI inflows is likely to depend on the types of leadership turnover in autocratic states because each type of turnover comes with different levels of political risk surrounding host nations. In particular, the amount of FDI is more likely to decrease when autocratic leaders exit irregularly rather than regularly. Furthermore, the negative effect of irregular exits of autocratic leaders is expected to be the strongest for the case of assassination, the second strongest when leaders are removed through non-foreign-supported events such as coups d'etat and civil wars, and the weakest when a leader is replaced in a foreign-supported event.

Research Design

To test these claims, we empirically examine the relationship between FDI inflows and 102 autocratic countries over the course of 34 years (1970-2004). (8) We employ time series cross sectional (TSCS) regression models with robust standard errors. (9) This model is suitable to our needs as it allows us to see how a wide variety of autocratic countries perform over the course of time. Given that the specter of time can

place some restrictions on multinational corporations' investing decisions, especially if a country is experiencing multiple leaders in small amount of time, using a TSCS model allows us to properly examine how FDI inflows adjust to different types of autocratic leadership change.

The measure we use for our dependent variable (FDI INFLOWS) comes from the World Development Indicators database. They are defined by the database as the net inflow of payments from any outside country to the host country that is being reported. Following previous studies in the use of this measure of FDI and its effects into autocratic countries, it is measured in (current) US dollars (Busse, 2003; Mathur & Singh, 2013)

Our main independent variable, leadership change, is measured in several different ways. In order to calibrate our model against previous studies looking at leader replacement and economic instability, we use a LEADERSHIP CHANGE variable that includes any type of autocratic leadership dismissal from office (regular or irregular). These data have been reported by the Goemans, Gleditsch, and Chiozza (2009) Archigos dataset. This data is also the source for the specific types of leadership change variables. In Archigos, the REGULAR leadership change variable is measured in terms of a leader leaving office through explicit rules or conventions. We take this to mean that a leader of an autocratic country leaves office relatively peacefully with little political and economic challenges. In these cases, the outgoing leader has usually tapped the predecessor and was hand picked to continue the policies of the former leader (Wright & Bak, 2016). This category is the vast majority of the leadership data.

The instance in which a leader is removed from office through extraordinary means has been deemed "irregular" in the dataset. We have split these irregular leadership changes into three separate categories. First, the IRREGULAR FOREIGN SUPPORTED variable places leaders whose exit was aided by the help, either financially or militarily, of another nation in this category. The United States aiding of the ouster of the Iraqi leader Saddam Hussein in 2003 is an example of this type of turnover.

The second category, IRREGULAR UNSUPPORTED, classifies countries that have primarily used coups to forcefully remove the autocrat from office. These irregular turnovers are ubiquitous in the Archigos dataset. Examples of irregular unsupported leadership change are Muammar Gaddafi's overthrow of the Libyan Monarchy in 1969 or the 1989 coup of the Sudanese Government by Col. Omar al-Bashir.

Finally the last category, ASSASSINATION, groups countries that have experienced the loss of their leader by the untimely death of their autocrat at the hands of a single person or group. The death of the leader may or may not be political. The Archigos dataset makes no judgment as to the ideological, political, or societal reason behind these acts. It is exactly this premise that would lead us to believe that this category would lead to the biggest loss of confidence in the market to support continued FDI flowing into the country.

To counter potential criticism that any inflow of FDI may be due to the flow of natural resources coming from the autocratic country, we include a measure of the rents received from a country's environmental resources. This measure, NATURAL RESOURCES, is measured as an annual percentage of the country's gross domestic product. This measure was mined from the World Development Indicators, and applies to any natural resource that a country may be exporting (this includes oil, lumber, gold, diamonds, etc.). While the expectations of FDI inflows in cases of high resources wealth should probably remain constant, we adhere to the theory that increased political risk affects the market in an adverse manner.

Political risk, itself, is a corollary to the decision-making power of the leadership. As such, we include the measure, POLITICAL CONSTRAINTS, to encapsulate this fact. This measure is an index provided by Henisz's (2000) POLCONV dataset. It is derived from a simple spatial model in which the number of veto points surrounding the leadership is counted; thus, countries with the lowest number of veto points will receive the lowest scores. Higher scores in the index would mean that the feasibility in the change of course in the market would be much more difficult, thus stabilizing the market, allowing for an increase in the amount of FDI flowing into the country.

To complete our empirical model, we include standard economic control variables (GDP GROWTH, GDP PER CAPITA, and TRADE). We have also included a lagged dependent variable (FDI INFLOWS(it) to simulate reality, in that typically the value of a given year's FDI is dependent upon the product of last year's FDI. Table 2 summarizes the definitions of included variables in our full model.

Empirical Analysis

Table 3 contains results from executing six different models. The first model uses the LEADERSHIP CHANGE variable as a main explanatory variable, which includes all types of leadership turnovers (See Table 2). The second model specifically uses the "regular" leadership turnover type (one of the categories of TURNOVER TYPE variable) as the main independent variable. It is designed to estimate the impact of relatively peaceful and predictable leadership change that occurs in autocratic countries on the inward FDIs. The third one, named a foreign model, focuses on the effect of an irregular-foreign-supported leadership disposal variable, and the fourth model includes an irregular-unsupported leadership change (not supported by foreign forces or entities) as a main independent variable. The fifth model estimates the effect of assassination on FDI inflows, and finally, the sixth model is a 'full' model including different categories of leadership change recorded in TURNOVER TYPE. (10)

The analysis has produced three remarkable results. First, the estimated coefficient of LEADERSHIP CHANGE is statistically insignificant. This suggests that autocratic leadership change in general does not have significant bearing on the amount of FDI inflows. This is not necessarily at odds with previous studies. First, Fails (2014) has shown leadership change to increase political risk of expropriation. However, the work does not examine the relationship between leadership change and FDI inflows; nor does it focus exclusively on autocratic leadership. Li's work (2009) also differs in many ways from this paper, including the observed time period ranging from 1960 to 1990.

Secondly, the second model shows the estimated coefficient of the regular leadership turnover variable to be positive and statistically significant at a 90% confidence level. This outcome suggests that an autocratic nation with conventional leadership change, such as an anticipated successor taking power, is more likely to experience an increase in FDI inflows. While we did not specifically theorize the positive impact, this result does support our proposition arguing the impact of irregular replacements of autocratic leadership to reduce FDI inflows compared to regular replacements, whose effects turn out to be positive. The reason we contended that was that regular leadership change is more predictable and causes less political turbulence to a country than irregular leadership change.

Lastly, the third, fifth, and sixth models show that the estimated coefficients of the irregular-unsupported and assassination variables are statistically significant and negative. These outcomes indicate that leadership change in an autocratic country caused by unexpected domestic events such as civil wars and coups d'etat are likely to reduce the amount of FDI inflows. As predicted, assassination decreases the amount of FDI the most, which places the negative effect of non-foreign-supported leadership turnovers to be the second strongest. The estimated coefficient of the irregular-foreign-supported variable is slightly positive, which makes this case to be the third 'highest' or weakest in terms of how irregular leadership influences FDI inflows. However, the coefficient is not statistically significant. We thus do not conclude that the foreign-supported irregular leadership change significantly affects the amount of FDI. Nonetheless, our analysis provides empirical support for the rest and most of our propositions and importantly maintains the main theme of this research. Figure 4 also shows varying marginal effects, illuminating such hierarchical effects of types of leadership turnover on FDI inflows.

The remainder of this section discusses the effects of control variables on FDI inflows. The estimated coefficient of the GDP growth is statistically significant and positive across different models. This suggests that an autocratic nation experiencing an economic growth is on average more likely to attract foreign direct investments. The estimated coefficient of the RECESSION variable is also statistically significant and positive for the fifth and sixth models. This may be due to the fact that there would be some foreign firms looking to make "sweetheart" deals for tax free land, discounted resources, or pay-for-play political influence with the incoming leadership, in an instance of both a leader being deposed and the country being in an recessionary environment. This is not an unfounded claim, as Sauvant et al. (2010) have found that when economic crisis trickles down to the emerging economies, some would offer products and firms at "fire sale prices," boosting FDI in that sector.

Conclusion

While relatively little attention is paid to the variation in FDI inflows among autocratic nations, this paper has focused on how different types of autocratic leadership change affects the inflow of such investment. We have argued and empirically demonstrated that the net amount of FDI inflows depends on the types of leadership turnover in autocratic states due to different levels of political risk surrounding host nations experiencing leadership changes. In particular, the amount of FDI is more likely to decrease when autocratic leaders exit irregularly than regularly; and the negative effect of irregular exits of autocratic leaders appears to be the strongest in the case of assassination, followed by the case when leaders are removed through non-foreign-supported events such as coups d'etat and civil wars.

These findings can help solidify the existing research base, such as Fails (2014) and Li (2009), which shed light on the effect of autocratic leadership on expropriation risks influencing the flow of inward FDI. This research has introduced new empirical evidence indicating that the types of conventional and unconventional autocratic leadership changes, not just length of leadership or frequency of changes, affect the amount of FDI flowing into an autocratic nation. In the future, the study of leadership change could extend to include more nations in the world from a wider time period, in order to further understand the link between leadership turnovers and FDI.

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J. Weston Jamison (1)

Chika Yamamoto Rosenbaum (2)

Justin Carter (3)

(1) J. Weston Jamison is a PhD candidate at Texas Tech University. <w.jamison@ttu.edu>

(2) Corresponding author: Chika Yamamoto Rosenbaum is Assistant Professor of Political Science at Texas A&M University-Kingsville. <Chika.Rosenbaum@tamuk.edu>

(3) Justin Carter is a PhD candidate at Texas Tech University

(4) In this context, "audience costs" refers to the negative reaction from the leader's constituency as the result of some policy or action.

(5) In this context, "congressional veto players" refers to those members of congress or parliament that are either close enough to the leadership or wield enough political power to be able to "veto" a policy.

(6) Fails (2014) has also focused on the types of leadership but rather emphasized their effects on political risk, not FDI inflows per se. The study also does not differentiate various types of "irregular" turnover.

(7) Fails (2014: 372) has asserted that leadership turnover may raise the levels of political risk regardless of the type of leadership change because "even when leaders in autocracies exit in regular fashion ... the new leader is still free to adjust their provision of private goods to the needs of their new winning coalition." However, based on empirical analysis, the author concludes that in autocratic states "rule-bound transitions [regular exits of leadership] are not as detrimental to political risk as irregular exits, though future research is needed to further disentangle the theoretical and empirical impact of these different types of leader turnover" (Fails, 2014: 383). Hence our theory is consistent with his concluding remarks.

(8) While Archigos reports leadership episodes from 1918 to 2004, many of the economic and institutional variables start reporting from 1970. Thus, due to list-wise deletion our sample only covers from 1970 to 2004.

(9) The use of robust standard errors has become synonymous with sound statistical methodology in the presence of estimators that are, at best, problematic (King and Roberts, 2014). Our variables are sourced from several different datasets as well as some of our making (RECESSION, DECADE, and POST-COLD WAR), as such; we are providing the most stringent model to eliminate potential bias. The reported models are consistent with models that implemented normal standard errors; thus we maintain that robust standard error is the correct specification for our models.

(10) The regular leadership turnover receives no estimated coefficient value since the variable is a categorical measure and is the "base category."

Caption: Figure 1: The amount of FDI inflows into autocratic countries over time

Caption: Figure 4: Marginal Effects of Types of Leadership Turnover on FDI inflows
Table 2: Summary of Variables

Variable                Definition

FDI [INFLOWS.sub.t]     The balance of payments from foreign
                        direct investment in year t measured
                        current $USD

LAGGED FDI              The balance of payments from foreign
[INFLOWS.sub.(t-1)]     direct investment in year t-1
                        measured current $USD

LEADERSHIP              Dichotomous measure of all leadership
CHANGE                  turnovers. Archigos reports 3,367
                        such instances

TURNOVER TYPE           Categorical measure of the type of
                        leadership turnover distinguishing
                        between: Regular (n: 2,318),
                        Irregular-Foreign Supported (n: 208),
                        Irregular-Unsupported (n: 823), and
                        Assassinations (n: 18)

GDP GROWTH              Continuous measure of gross domestic
                        product in the autocratic country in
                        year t, measured in current $USD

GDP PER CAPITA          Continuous measure of gross domestic
                        product per capita in the autocratic
                        country in year t, measured in
                        current $USD

POLITICAL               Henisz's index of veto points
CONSTRAINTS             surrounding the leadership of the
                        autocratic country. Calculated so
                        that each additional veto point (i.e.
                        minister, branch of government, etc.)
                        adds a positive (but diminishing)
                        effect on the feasibility of policy
                        change

NATURAL                 Continuous measure of the rents
RESOURCES               obtained from the exporting of
                        natural resources from the autocratic
                        country in year t, measured as a
                        percentage of the country's GDP

TRADE                   Continuous measure of the sum of
                        exports and imports of goods and
                        services measured as a percentage of
                        gross domestic product in year t

RECESSION               Dichotomous measure of the instances
                        of recession in the autocratic
                        country in year t. It is coded 1 when
                        the annual GDP growth is below 0.25%,
                        0 otherwise

AGE                     Reports the age of the leader at any
                        given year t

DECADE                  Categorical measure distinguishing
                        between: 1970s, 1980s, 1990s, and the
                        2000s

POST-COLD WAR           Dichotomous measure discerning the
                        time when a country is in the Cold
                        War era (1) and when it is not (0)

Table 3: Empirical Results

Variables                               (1)         (2)
                                     All Types     Regular

Leadership Change (all types)          1.085
                                      (0.119)
Regular Leadership Turnover                         1.76 *
                                                   (0.051)
Irregular (Foreign Supported)

Irregular (No-foreign Supported)

Assassination

FDI Inflow (lagged)                    0.145        0.132
                                      (0.217)      (0.269)
GDP Growth                            0.190 **     0.179 **
                                      (0.023)      (0.023)
GDP per capita                       -0.000431    -0.000361
                                      (0.171)      (0.209)
Political Constraints                  1.186        1.230
                                      (0.232)      (0.173)
Trade (% GDP)                          0.0305       0.0316
                                      (0.119)      (0.101)
Recession                              1.363        1.371
                                      (0.105)      (0.109)
Natural Resources                      0.0320       0.0361
                                      (0.627)       (0.59)
Post-Cold War                         1.472 *      1.435 *
                                      (0.053)      (0.059)
Age                                    0.0188      0.0247 *
                                      (0.164)      (0.082)
Constant                              -3.25 **    -4.735 **
                                      (0.029)      (0.016)
N                                       1603         1603
R-sq                                   0.131        0.138

Variables                               (3)          (4)
                                      Foreign     Non-Foreign

Leadership Change (all types)

Regular Leadership Turnover

Irregular (Foreign Supported)          0.769
                                      (0.444)
Irregular (No-foreign Supported)                   -2.482 **
                                                    (0.037)
Assassination

FDI Inflow (lagged)                    0.141         0.128
                                      (0.242)       (0.286)
GDP Growth                            0.188 **      0.178 **
                                      (0.025)       (0.020)
GDP per capita                       -0.000425     -0.000353
                                      (0.182)       (0.173)
Political Constraints                  1.276         1.176
                                      (0.197)       (0.175)
Trade (% GDP)                          0.0301        0.0311
                                      (0.131)       (0.103)
Recession                              1.360         1.341
                                      (0.109)       (0.106)
Natural Resources                      0.0351        0.0353
                                      (0.606)       (0.591)
Post-Cold War                         1.555 *        1.44 *
                                      (0.053)       (0.055)
Age                                   0.0234 *       0.0226
                                      (0.096)       (0.103)
Constant                             -3.472 **      -2.782 *
                                      (0.028)       (0.054)
N                                       1603          1603
R-sq                                   0.128         0.143

Variables                               (5)              (6)
                                     Assassination       Full

Leadership Change (all types)

Regular Leadership Turnover

Irregular (Foreign Supported)                            0.342
                                                        (0.658)
Irregular (No-foreign Supported)                       -2.439 **
                                                        (0.039)
Assassination                          -4.604 ***     -4.864 ***
                                        (0.000)         (0.000)
FDI Inflow (lagged)                      0.140           0.126
                                        (0.240)         (0.286)
GDP Growth                              0.193 **       0.187 **
                                        (0.020)         (0.014)
GDP per capita                         -0.000351       -0.000316
                                        (0.276)         (0.277)
Political Constraints                    1.322           1.129
                                        (0.183)         (0.198)
Trade (% GDP)                            0.0307         0.0311
                                        (0.122)         (0.106)
Recession                               1.402 *         1.412 *
                                        (0.099)         (0.086)
Natural Resources                        0.0375         0.0379
                                        (0.586)         (0.569)
Post-Cold War                            1.53 *         1.455 *
                                        (0.054)         (0.053)
Age                                     0.024 *         0.0227
                                        (0.092)         (0.106)
Constant                               -3.605 **       -2.967 **
                                        (0.024)         (0.044)
N                                         1603           1586
R-sq                                     0.130           0.146

Dependent Variable= FDI inflows as percentage of total GDP (see also
Table 2). Significance level is shown as follows: *** p<0.01,
** p<0.05, * p<0.1. Standard errors are in parentheses. Temporal
variables (DECADE), which are statistically insignificant, are
not reported in this table.
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Author:Jamison, J. Weston; Rosenbaum, Chika Yamamoto; Carter, Justin
Publication:The Journal of Social, Political and Economic Studies
Date:Sep 22, 2017
Words:6470
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