Foreign Direct Investment and Human Rights: An Ambiguous Relationship

Abstract

Abstract In her article 'Foreign Investment and Human Rights' (1999), Debora Spar argues that FDI is inclined to improve human rights conditions in host countries. Spar's argument is examined at two levels. First, a brief analytical sketch of the component parts of her argument is provided. By contrasting this sketch with a broader development literature, it is noted that Spar has failed to acknowledge that the benefits of FDI might be conditional. Second, aggregate data of the composition of FDI and OLS regression techniques are used to test her theory against the universe of examples it claims to describe. This analysis suggests a more complex relationship between FDI and human rights. The conditional benefits of FDI (which depend upon a threshold of created assets in the host countries) help to explain some of the geographical diversity of FDI, but even then the ambiguity in the results exceeds the variance explained. Keywords: International political economystate—market relationsglobalisation