International Regime Theory and Foreign Direct Investment

In his book, “U.S. Power and the Multinational Corporation”, Gilpin (1975) asserts that the trouble with removing the artificial line that separates the political and economic sub-systems lies in the fact that “economists do not really believe in power, [and] political scientists, for their part, do not really believe in markets”.

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Indeed, since Gilpin’s first attempt thirty years ago to establish a political economy of foreign investment, much of the writing by economists and political scientists on that subject has been “as if they were talking about entirely different sets of actors and activities”.

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The following analysis assumes the relationship between economics and politics to be a reciprocal one, and should therefore be understood as an attempt to qualify FDI governance-related suggestions made in previous normative sections in the context of international and domestic politics.