How do foreign investors respond to domestic electoral politics? A political investment cycle dynamic predicts investments increase before elections while an uncertainty and delay hypothesis anticipates investment declines in advance of elections. This study adjudicates these competing expectations, arguing that foreign firms locate their investments based, in part, on electoral predictability. We theorize that firms prefer to invest in locations holding clear-winner elections, and avoid close-call elections, where the outcome is uncertain. We test this theory in the context of U.S. congressional elections, arguing that legislators provide access to public resources, policy influence, and coordination across levels of government, and therefore investors benefit from stable representation. Using geolocated data on greenfield foreign direct investment (FDI) announcements in the United States from 2003 to 2017, we find that FDI announcements rise significantly in election years—but only in districts with clear-winner elections. Mediation analysis shows that increased federal appropriations partly explain this pattern, consistent with our argument that electoral predictability enhances firms’ ability to secure political support. These findings reveal a political bias in global capital allocation: politically monopolistic districts attract more investment, while vibrant electoral competition deters it—raising fundamental concerns about the interplay between democracy and money.

We identify a novel pathway that links financial globalization to politics. We emphasize the effect of globalization on the relationship between governments and domestic business owners, who, like all borrowers, are subject to “Global Credit Cycles” originating from the U.S. Downturns in these cycles, stemming from high U.S. interest rates, reduce credit availability, depress asset prices, and broadly worsen the outlook for private sector profits. While politicians have limited power to address the underlying financial conditions, they can adopt business-friendly politics to signal their willingness to compensate firms for the higher borrowing costs driven by higher U.S. interest rates. We support our argument with evidence from party manifestos across 59 countries, covering 1963 to 2017. Our paper documents a new connection between global credit cycles and party positions during an era of largely unrestricted capital mobility.

The Covid-19 pandemic entailed a historic high in public spending. Some of these resources were channeled through interest organizations, such as business groups and non-profits. In this paper, we gauge potential inefficiencies in their distribution. Funds may be distributed according to the logic of rent-seeking, whereby organizations use lobbying to extract benefits from the state, or a pluralist logic of disturbances, where funding allocation follows organizational grievances. These two logics might even interact, meaning that organizations in need ought to signal their needs through lobbying first. We use data from two survey waves in eight European polities to test these arguments. Our findings provide support for theories of rent-seeking, showing that lobbying activities are associated with increases in public funding, whereas organizations’ needs and survival fears are not. However, our exploration of interaction effects nuances this picture. Our study sheds light on important dynamics behind resource allocation when crisis-related public spending is high.

Work on the relationship between regulation and bribery suggests that bribes are a joint function of the demands of bureaucrats and the supply of business managers willing to pay them. However, due to biases in measurement, empirical work has concentrated on country-level, demand-side drivers, while research on factors that lead businesses to bribe remains theoretically rich but empirically underdeveloped. We contribute to the burgeoning work on the supply of bribery with a formal model that predicts poorly managed firms may strategically initiate bribes because resource constraints and/or poor service quality necessitate shortcuts in regulatory compliance. To test these theories, we present two connected studies. The first demonstrates that the predictions are consistent with cross-national business survey data. The second, a field experiment, randomly assigned firms to management training courses in Vietnam. Using detailed accounting books, we find that firms in the management course paid monthly bribes less than one-fifth the size ($227 less) of the placebo group, and, consistent with our predictions, had higher levels of regulatory compliance.

This article examines the political backlash to “woke capitalism” in the USA in the context of the introduction of anti-ESG legislation across 18 US states. This article asks what this backlash reveals about the evolving power dynamic between business and the state through analysing the problematisation of responsible investment in Florida Governor Ronald DeSantis’ “war on woke.” This article finds that the state frames socially and environmentally responsible investment as the imposition of an ideological agenda by “martini millionaires” at the expense of the democratic will and economic liberty of “everyday Americans.” This article makes a novel contribution to understandings of the power dynamic between business and the state, through a focus on discursive power, and identification of investment as an underexamined arena of political contestation, demonstrating that the trigger for state pushback on “woke capitalism” is when business goes beyond virtue-signalling to embrace systemic change.

Transitioning away from fossil fuels is in the best interest for long-term stakeholders of oil firms to mitigate risk from climate policy. Yet firms have an informational and positional advantage over strategies to mitigate climate-related risks, such that there is little incentive to decarbonize. Building on theories of firm behavior and the three faces of political power, we argue that investor pressure will be unlikely to change the climate strategy of fossil fuel firms. To measure climate strategy, we develop a novel technique using natural language processing tools to parse annual filings of all publicly-listed oil firms in the US. Using a difference-in-differences design exploiting an exogenous shock to shareholder power from a Securities and Exchange Commission regulatory amendment, we find no effects of shareholder pressure on deep reforms to climate strategies and weak effects on incremental pro-climate behavior. Through a case study of ExxonMobil, we show that climate-motivated investors are unable to overcome internal stakeholder resistance, despite shareholder pressure through direct communication, filed resolutions, and media campaigns. Our findings illustrate that polluting firms remain resistant to financial pressure for decarbonization, suggesting an important role for policy.

Interest groups spend large amounts of money on public campaigns, but do these outside lobbying strategies change public opinion? Several recent studies investigate this question, but come to different conclusions. We integrate existing approaches into one factorial design and conduct a well-powered survey experiment across two countries. We randomize type of interest group support and message medium in support of two prominent climate policies. Our results suggest that interest group messages can have a short-term influence on public opinion. However, the effects are not different from policy messages without interest groups, are not larger for messages from interest group coalitions, and are only effective for subsidies, but not for increases in taxation. In addition, we investigate the mechanism linking outside lobbying and public opinion and find that outside lobbying signals higher support for policies among the public. Our results have implications for comparative studies of interest group strategies.

What drives elite capital flight into offshore destinations? While existing literature focuses on regulatory gaps or global tax competition, international bailouts themselves can catalyze elite capital flight. Specifically, we examine how two instruments of the Global Financial Safety Net (GFSN)—the International Monetary Fund (IMF) and the People’s Bank of China (PBoC)’s swap lines—impact elite incentives to move wealth offshore. We develop a two-dimensional framework centered on Disbursement Control and Elite Threat Perception to theorize when and how elites extract and expatriate wealth. Using data from 201 countries between 1990 and 2018, we find that the anticipation of IMF programs increases offshore bank deposits by 14.2%, consistent with elites responding to rising threat perception. By contrast, the introduction of PBoC swap lines increases offshore deposits by 92.3%, reflecting extraction under low disbursement control, enabling moral hazard. We illustrate the core mechanisms of our argument through mini-case studies of Angola, Tajikistan, and Mongolia. Our findings reveal a structural vulnerability in the GFSN stemming from regulatory fragmentation and uncoordinated oversight.

This paper examines whether political connections can protect firms from losses resulting from a government’s adverse policies. I explore this question in the context of Argentina’s partial nationalization of publicly traded firms in 2008–2011, resulting from the counter-reform of the country’s pension system. I find that partially nationalized firms in Argentina incurred much greater losses than firms in a control group. Among the partially nationalized firms, those with political connections were hurt less than non-connected firms. However, political connections lost all their value in firms where the government acquired a very large ownership stake. I also find that foreign ownership offered firms no protection against losses stemming from partial nationalization. These results suggest that in an unfavorable policy environment, firms may not be able to fully rely on political connections for protection.

‡Between 2020 and 2022, China’s digital platform sector underwent a substantial regulatory shift, marking a clear departure from the previously lenient approach toward digital platform firms. While much of the existing research has focused on external factors—such as the unchecked growth of tech giants, the Chinese Communist Party’s goal of “common prosperity,” and the U.S.–China rivalry—this paper highlights internal institutional changes that facilitated this regulatory transformation. Specifically, it explores how the 2018 bureaucratic restructuring within China’s regulatory apparatus fostered “domain-specific centralization,” concentrating regulatory power within agencies overseeing key domains such as financial regulation, antitrust, and data security. It argues that such centralization reduced regulatory overlaps and gaps, allowing the state to control major digital platforms more directly. Using case studies of Ant Group’s suspended initial public offering, Alibaba’s antitrust fine, and Didi’s data security investigation, this paper shows how variations in centralization across domains shaped regulatory outcomes. The findings provide new insights into China’s evolving regulatory governance and offer broader implications for the relationship between the state and business in the digital economy.

This article examines how subnational fiscal competition over foreign direct investment affects both the siting of new projects and the ability of local governments to raise tax revenue for social spending. We leverage a quasi-natural experiment, an unexpected declaration by the Brazilian Supreme Court in 2017 that reduced states’ ability to offer investors differentiated tax subsidies. Our results show that disadvantaged regions did not see a major shift in investment patterns after the change in investment law. We do not find a consistent relationship between the incentive law change and state revenue generation, but we do find that incentives are associated with less revenue. The results are consistent with arguments that investment incentives exacerbate inequality by reducing states’ capacity to collect revenue while doing little to affect investment location. Our results illustrate that economic agglomeration is difficult to reverse through tax policy and that fiscal federalism often cannot provide strong enough inducements to drive investment into less advantaged regions.