THE AFFINITY OF FOREIGN INVESTORS FOR AUTHORITARIAN REGIMES

Military coups in Argentina, Brazil, and Chile in the 1960s and 1970s cast doubt on the liberals' belief that democracy and economic develop ment are mutually reenforcing. Indeed, Guillermo O'Donnell and other r adicals argued that democracy was inconsistent with the requirements f or development within the strictures of international capitalism. Stro ng and weak versions of the radical thesis linking authoritarian regim es to the interests of multinational corporations are tested by analyz ing the flow and profitability of U.S. foreign direct investment. Do m ultinationals benefit materially from autocratic regimes? Pooled cross -sectional and time-series regression analyses of 48 countries, 1950-8 5, indicate that U.S. multinational corporations have fared best in th e developed democracies; but rates of return in the periphery have bee n greater under authoritarian regimes. Investment flows have not been significantly related to regime type.