What question did this study set out to answer?

The research aims to understand how cabinet policy orientation affects gross capital inflows in OECD countries.

March 13, 2026Review of World Economics0 citationsOpen Access

A note on cabinet’s policy orientation and gross capital inflows in OECD countries

CMChristos Mavrogiannis ATAthanasios Tagkalakis

Key Points

The research aims to understand how cabinet policy orientation affects gross capital inflows in OECD countries.
Constructed a new measure of cabinet policy orientation.
Analyzed transitions from state-oriented to market-oriented cabinets.
Examined the relationship between product/labor market reforms and investment types.
Transitions to market-oriented cabinets correlate with higher direct investment inflows.
Product market reforms attract more direct investment under state-oriented cabinets.
Labor market reforms increase both direct and portfolio investment under market-oriented governments.

Abstract

By constructing a new measure of cabinet policy orientation, we demonstrate that transitions from state-oriented to market-oriented cabinets are associated with higher direct investment inflows. Product market reforms are more conducive to the inflow of direct investment under cabinets that prefer a state-oriented economy. Labor market reforms significantly boost direct investment and portfolio investment under governments favoring a market-oriented economy.

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