Book Review Foreign Investment and Political Regimes: The Oil Sector in Azerbaijan, Russia and Norway.

Oksan Bayulgen. Cambridge, 2010. 290 pp. Oksan Bayulgen is an expert on In Foreign Investment and Political Regimes Oksan Bayulgen provides clear analysis on political regimes in accordance with foreign investment with offering different three oil countries (Azerbaijan, Russia and Norway) from different regimes. He gives a good deal to the readers with discussing some theories such as The obsolescing theory in order to show difficult dilemmas which occurs between foreign investors and political regimes of host countries in terms of occurring political risks between them. Author with these words Although all three states have similar needs for foreign capital, Azerbaijan and Norway received significant amount of FDI, but Russia little provided elegant theoretical approach to Russian hybrid political regime which considered worse than both democracy and authoritarianism in Norway and Azerbaijan. For Bayulgen, she depicts mainly three hypotheses derived from the debate over the effects of democracy on FDI. In the first case, business area has more effects on FDI rather than political factors. Secondly, author demonstrates the positive role of democracy in order to attract FDI. Finally, the significant importance of authoritarian regimes on attracting amount of FDI was given in this book provides clear outlook over the generous terms for the companies by authoritarian leaders. In here, she shows that authoritarian regimes has more opportunities to cooperate with the companies rather than democratic institutions which they restrict the generosity of the fiscal and financial incentives. While giving three countries from various political regimes, Bayulgen gives effects of institutions on Investment Environment and the level of FDI. As mentioned above, Russia from Hybrid regime has unstable and low investment environment while Azerbaijan and Norway has high level of FDI flow as well as flexible and stable investment environment accordingly. In this book, the author argue that the losers of FDI are neither consolidated democracies nor authoritarian regimes, but the hybrid regimes. Executive constraints and political competition based on various regimes determines the attractiveness of FDI. As the author depicted, Azerbaijan is a country which has unconstrained

and uncompetitive political regime. The country has no veto players as central and regional administrations have no voice in policy making policy and it assists in attracting foreign investors. Unlike Azerbaijan, Russia as from hybrid regime has more constraints on state executes and divisions among the institutions affected on chaotic policy-making process. However, Norway creates good opportunities for investors with its stable investment environment. Three levels political system and opposition groups in policy-making process (national, regional and local level municipalities) also contributed to creating a stable investment environment in this country. The author also illustrated post-soviet and European countries with giving bright views on historical backgrounds, investment performances and political regimes of these countries in accordance with FDI patterns. Azerbaijan in the first period of independence has shown a great investment performance mainly due to geostrategic interests in the region. Besides these geostrategic interests in region, Azerbaijan has more eagerness to open this country to foreign investors and get foreign capital in order to improve the image of the country. Moreover, with the foreign capital and the alliance of foreign oil companies state leaders secure their position and build legitimacy around new regime. As Oksan Bayulgen showed, foreign capital to the country creates antidemocratic tendencies in terms of shaping of political regimes by foreign companies while they protect the position of status quo and turn blind eye to violations of democratic principles and practices (pp.114-115). On the other hand, Russia historically banned its oil sector to foreign investors especially in the set of seventy years after Bolshevik Revolution. Then in country some steps were taken in forward to improvements of PSAs and signed drafts, but foreigners did not find stable investment environment for implementing their projects. Unlike Azerbaijan, struggle between executive and legislative branches as well as strong veto players and interest groups in Russia delayed the flow of foreign investment and progresses on PSA regime. Different from Russia, Norway has basic institutional arrangements which contributed to stability of the organizational framework of oil industry and attract foreign investment. The high degree of pluralism in the state restricted the work procedure of the executives in the government and involved active participating of working parliament. Despite the challenges by Norwegian government in 1970s, FDI continued because of stability, predictability and transparency that Norwegian democratic regime offered to investors.

In conclusion, as author stated and explained in Azerbaijan and Norway case, both authoritarian regimes and consolidated democracies can be seemed attractive to FDI, but as hybrid regimes is not compatible with global economy and do not attract FDI patterns. Foreign Investment and Political Regimes is a must read book that provides the readers with a good knowledge, while the author gives information on oil sector both from Europe and Post-Communist world. Theoretical approaches to regime types and political institutions in accordance with FDI are a good work by the author which can be useful for people who interested in foreign capital related to energy sector.