Policy uncertainty spillover and role of institution: Evidence from the mining sector
Examining the role of institutional quality
How do multinationals reallocate assets across geographies in uncertain times? Are countries always negatively affected by uncertainty abroad, or they might gain from it in certain circumstances? Using data from the mining industry, this paper suggests that domestic economic policy uncertainty leads to relatively higher investment in foreign mines, and that the effect is greater when a firm’s country of domicile and that of its foreign establishment(s) are signatories to a bilateral investment treaty – thereby providing greater institutional quality for the firm’s operations.