Completion of this thesis would not have been possible without the time and dedication of my advisors, Drs. I'd also like to take the time to thank my friends for their support and dedicate this thesis to my father, Hjalmar E. If there's one thing both he and this thesis have taught me, it's that it's worth being proud of what you do. you work, and work to the best of your ability.
This thesis uses 2SLS to investigate the relationship between levels of Media Freedom, Socio-Political Stability and FDI, using corruption as a robustness control. He finds that there is a positive correlation of FDI levels to both Media Freedom and Corruption, providing a theoretical framework within which they operate.
Introduction
This thesis successfully tests this relationship and also discovers a remarkably similar relationship shared between FDI, stability and levels of perceived corruption. Following this statistical analysis, this thesis concludes with policy recommendations and suggestions for future research.
Literature Review 3
In relation to this theory of bridging the information gap, further research also shows that press freedom reduces corruption and improves civil rights (Djankov et al. 2002). News that spreads outside the host country could create external pressure on the government from abroad. In addition to the literature on the link between press freedom and political stability, there is also an extensive body of work documenting it.
As a result, much of the relevant research leading up to Sing and Jun's study was contradictory. Arahoni determines that political stability in the host country is the second most important factor in whether or not to invest abroad, after market potential. Another variable, the legitimacy of the regime, was found to be significant for a lagged period but not significant for the current period" (Singh and Jun, 1995: 5).
In Central Asia, clan norms "became the rules of the game", while the constitutional structures created after the collapse of the Soviet Union became Rentier states are still corrupt because most of the wealth is absorbed by the state, but just enough wealth is transferred to the public to appease any desire for structural political or economic change.
Methodology 12
Analysis. Results
In this thesis, each regression is examined in the order of the directional relationship presented in Chapter II. When the ß coefficients are analyzed, there is a statistically significant correlation between the lagged effect of media freedom and the levels of stability. The positive β value for stability suggests that there is a positively correlated statistic that discourages an interpretation in favor of the directional theory.
The direct relationship between media freedom with a 1-period lag and FDI is shown visually in Graph 1. With the two stages of the regression combined, there is overwhelmingly strong evidence that the effects of press freedom and stability follow the directional theory outlined in Chapter II. The addition of corruption as a control has a relatively small effect on the ß coefficient for media freedom.
What is more interesting is that corruption itself has a positive, statistically significant correlation with stability that is 50% stronger than that of media freedom. But a comparison of the ß coefficients indicates that although the introduction of the corruption variable into the equation creates a ß-. In fact, corruption could serve as a yardstick to measure the power of the media.
In the first stage, both Corruption and Media Freedom have ß-coefficients indicating a positive correlation with stability. Where in the lagged regressions corruption was 50% stronger than Media Freedom for predicting stability, the effect was reversed in the 2SLS model. This enables a rejection of the null hypothesis ßkMedia Freedom = 0 and confirms strong statistical evidence that a domino-style relationship between Media Freedom, Stability and FDI does exist.
Furthermore, this analysis shows that there is indeed a positive effect of corruption on FDI levels and that this relationship mimics that of media freedom. An important theoretical difference between how media freedom and corruption can affect stability and FDI levels is that corruption can have a quadratic relationship with these variables, rather than linear. This can be interpreted as politicians accepting bribes without fulfilling their obligation to exchange, or as a host government nationalizing certain industries.
Although the shape of the scatter plot in Chart 4 shows that this quadratic relationship actually exists, the results of this regression are not conclusive (the full output is listed as a table in the Appendix). A quadratic regression for media freedom was not performed because there is no theoretical or empirical research to suggest this.
Conclusions
Because both media freedom and corruption depend on stability to ensure more foreign direct investment, there is a serious possibility that even if a regime were able to balance between the two strategies, the pathway through which corruption and media operate, as well as resulting foreign direct investment, would be removed. Assuming that there is indeed a mutual exclusivity between a free media and corrupt levels of government control, this thesis can empirically recommend that world leaders pursue an open strategy for a free media because of evidence that it actually has a stronger effect on FDI - the influx. Even without considering FDI or economic growth, this thesis would still recommend the adoption of "open" strategies because of the economic externalities created, such as increased personal and financial freedom for individuals.
A common recommendation among economists that this thesis will support is to increase the level of education offered and obtained, as both Tables 3 and 7 show a strong, positive correlation between higher levels of education and greater media freedom. However, at the time of writing this is only the first formal attempt to explore the relationship between media freedom and foreign direct investment. As a foray into such new territory, this thesis naturally contains many flaws.
For example, a study examining how media freedom affects FDI inflows relative to a nation's current level of economic development. Further research could also be used to dig deeper into the contexts found in this thesis. Such research could involve a deeper investigation of whether media freedom or corruption has an additional influence on foreign direct investment.
What could greatly benefit this thesis would be further research into the relationship between corruption and media freedom. The regression in Table 7 revealed that corruption enjoys a statistically significant positive relationship, but this thesis does not find any theoretical or empirical research to support the data. One of the limitations of this thesis is that due to data limitations, it could only extend over a period of 8 years.
Alam, Abdullah; Ali Shah, Syed Zulfiqar, "The Role of Press Freedom in Economic Development: A Global Perspective" Journal of Media Economics. The Effects of Foreign Direct Investment on Host Country Economic Growth: Theory and Empirical Evidence.” Singapore Economic Review. The Impact of Democracy and Press Freedom on Corruption: Conditionality Matters.” Journal of Policy Modeling, 2013, Vol.
Washington, DC: World Bank "The Right to Tell: The Role of Mass Media in Economic Development." 2002. The Impact of Corruption on a Country's FDI Attractiveness: A Panel Data Analysis Journal of International and Area Studies.
