This paper examines the relationship between democracy and foreign direct investment (FDI) in the Arab World over the period 2002–2013. The results show strong evidence of an inverted U-shaped relationship between democracy and FDI. This means that democratization should only be FDI-fostering if a country is not sufficiently democratic. In an attempt to explain these findings, we show that the asymmetric effects of democracy on FDI stem from the U-shaped democracy–taxation path. That is, at earlier stages of democratization, democracy is associated with lower taxation levels, which promotes FDI. However, when a certain level of democracy is reached, a deeper democratization would increase taxation, which hampers FDI. Hence, a moderate improvement in political and civil freedoms seems to be a key prerequisite to attract more FDI in authoritarian Arab countries.

中文翻译：

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阿拉伯世界的民主化在什么条件下会促进外国直接投资？

本文考察了 2002 年至 2013 年期间阿拉伯世界民主与外国直接投资 (FDI) 之间的关系。结果显示了民主与 FDI 之间倒 U 形关系的有力证据。这意味着只有在一个国家不够民主的情况下，民主化才能促进 FDI。为了解释这些发现，我们表明民主对 FDI 的不对称影响源于 U 形民主-税收路径。也就是说，在民主化的早期阶段，民主与较低的税收水平相关联，从而促进了 FDI。然而，当达到一定程度的民主时，更深入的民主化会增加税收，从而阻碍 FDI。因此，