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How does organized crime affect foreign direct investment (FDI) in developing countries? Some research examines the effects of crime, such as homicide rates, on FDI. However, we know little about how organized crime in particular might affect such investment. This paper examines organized crime and FDI in Mexican states between 2000 and 2018. This case is important because Mexico is one of the top global recipients of FDI. At the same time, criminal violence has killed hundreds of thousands of people in Mexico in recent years, and scholars seek to understand the violence's wider effects. We explain how organized crime competition, as opposed to crime generally, should shape investors' decisions. Analyses using original data on criminal organization territory find that higher numbers of criminal groups are associated with lower levels of new FDI. Other measures of crime, such as homicide rates or crime rates, are not associated with foreign investment. [ABSTRACT FROM AUTHOR]

Do foreign investors have subnational political preferences? The political economy of foreign direct investment (FDI) involves not only choosing among host countries, but also the subnational location of the assets. However, factors affecting investors' decisions about subnational location likely differ from the ones affecting international investment. This paper studies the effect of state-level partisanship on new FDI inflows to Mexican states. I argue that investors prefer states ruled by left-wing governors because they are more likely to invest in human capital. Statistical analyses using new data on subnational allocation of FDI in Mexican states between 1999 and 2017 support the main hypothesis. Given the persistence of authoritarian enclaves in Mexico, I also disentangle the effects of partisanship from subnational democratization. The partisan effect is independent from party turnover and political competition at the subnational level, and it is robust to different model specifications and estimation strategies. Additional evidence supports the plausibility of the argued mechanism. [ABSTRACT FROM AUTHOR]