Rewarding Corruption? The Perverse Effects of Judicial Corruption on Foreign Direct Investment in Latin America

The traditional view that inter-branch judicial independence is a necessary condition for high levels of foreign direct investment is flawed because it neglects to consider the significance of the autonomy of judges from societal actors as a distinct factor. Separating these two aspects of judicial independence and then interacting them produces four “judicial regime types”: the Liberal, Partisan, Clandestine Control, and Dependent judicial regimes. Using data from the World Economic Forum’s Global Competitiveness Reports, this study examines the influence of judicial regime type on levels of foreign direct investment in Latin America. Case studies drawn from Central America demonstrate that Dependent judicial regimes may have advantages over even the highly independent and autonomous Liberal regimes.