OUP user menu

Legal System Pathways to Foreign Direct Investment in the Developing World

Hoon Lee, Glen Biglaiser, Joseph L. Staats
DOI: http://dx.doi.org/10.1111/fpa.12026 393-411 First published online: 1 October 2014

This article has a correction. Please see:


Building on recent works showing the role that legal institutions can play in attracting foreign capital (Jensen 2003, 2006; Li and Resnick 2003; Li 2006; Biglaiser and Staats 2010; Staats and Biglaiser 2012), and drawing on insights obtained from Powell and Rickard (2010), we use panel data for 114 developing countries from 1970 to 2007 to demonstrate that developing countries with common law legal systems attract greater foreign direct investment (FDI) than countries that have civil law or Islamic legal systems because common law systems are more inclined to promote the rule of law and protect property rights and can be understood to provide more efficiency in the law, better contract enforcement, more judicial autonomy, and more market-oriented regulations.

View Full Text

Sign in

Log in through your institution

Sign in as a personal subscriber

Log in through your institution

Purchase a personal subscription