Multinationals and the State of Civil Liberties and Political Rights in Asia

This research paper analyses the possible influence of political rights and civil liberties in Asian developing host economies on the foreign direct investment (FDI) decision of the multinationals from the developed source nations. Generally, United States, European Union and Japan are considered as the primary sources of FDI. All of them locally have very high standards of political rights and civil liberties. Their societies are extremely sensitive for the respect of personal choice and freedom to express oneself. The current study tries to ascertain that whether the existence of a better set of the same principles have any effect on the investors of these countries. Utilising annual data of twenty six developing states from Asia for twenty one years, it is found through random effects panel technique that political rights significantly influence the investors’ location choice in overseas markets as a possible long-term host to their investment. However, contrary to expectations civil liberties have a negative sway, though the effect is insignificant. The conventional FDI location drivers such as market size, development level, extent of economic liberalisation continues to significantly affect multinationals.