During the last 15 years, the study of the politics of resource wealth has both grown in size and advanced in methodological rigor. Terry Karl's The Paradox of Plenty (1997) and Michael Ross's “Does Oil Hinder Democracy?” (Michael Ross, “Does Oil Hinder Democracy,” World Politics 53 [April 2001]: 325–361) provided seminal points of reference with respect to the political dynamics in oil-exporting countries. This research program has branched out in terms of the outcomes it explores and has increasingly acknowledged the conditional impact that oil wealth can have.

Oksan Bayulgen's recent book asks us to reverse the causal arrows and to explore the effects of regime types on foreign investment in the oil sectors of exporting countries. It examines an issue prior to the actuality of oil wealth—getting it out of the ground in order to generate foreign exchange. This is an important question: The current fortunes of countries such as Iran and Venezuela hinge on their abilities to continue to exploit current fields and to develop new ones, but at the same time their policies have robbed them of the capacity to attract new foreign investment. Bayulgen focuses on why it is that some oil-producing countries have so much more success in attracting investment in that sector than do others.

The basic argument of the book is that a country's success in attracting foreign investment in the oil sector (and later more broadly) is a function of politics, namely, executive constraint and political competition (pp. 4, 49). These two factors shape the capacity of political regimes to provide the credible commitment that investors seek. What Bayulgen suggests is that highly coherent regimes—both democratic and autocratic—can for different reasons offer that commitment, while in-between or, in her terminology, “hybrid regimes” cannot (pp. 5, 59). Their “unstable” and “chaotic” nature prevents the kinds of credible commitments to investors to keep them in, resulting in low levels of investment. She goes so far as to argue that in the contemporary world, hybrid regimes are not viable polity types when it comes to bringing in foreign investors: “The real losers of FDI [foreign direct investment], therefore, tend to be neither consolidated democracies nor authoritarian regimes; they are the hybrid regimes” (p. 5). I return to this contention later.

Bayulgen focuses on the oil sector in three countries—Azerbaijan, Norway, and Russia—to elucidate the theory's implications. As she notes (p. 4), the oil sector is “a hard case” for the theoretical argument, since its geostrategic value and centrality to the global economy might arguably provide a powerful incentive for foreign corporations to invest almost no matter what the political climate. Employing detailed case narratives of the history of oil development in each country, the author illustrates how, on the one hand, Azerbaijan and Norway had considerable success in attracting foreign investment in their oil sectors, but for quite different reasons and with equally different development implications. Azerbaijan's hyper-powerful executive has meant that there is virtually no accountability to domestic political interests in the president's dealings with foreign corporations. It has also led to skewed development. Norway, benefiting from greater political pluralism among other advantages, has generally managed to avoid the resource curse, leading the author to refer to “Norwegian Exceptionalism” (p. 208).

Russia has fared much less well than either of the others in attracting foreign investment, or at least did so during the 1990s, the heyday of what Bayulgen refers to as the country's hybrid regime. She argues that the incoherence of the Russian government created an inhospitable environment for investors. Subsequent to Vladimir Putin's ascent to power, however, things changed. The increasingly autocratic rule that Putin assembled, argues Bayulgen, has stabilized the political arena enough to entice investors to return, leading to the rebound of foreign investment in the oil sector.

The author follows this three-case comparison in Chapter 8 with a set of quantitative analyses meant to demonstrate the theory's broader purchase in explaining global trends in FDI. Central to the statistical models is a unique variable—combining political competition and executive constraint (PCC)—on which levels of foreign investment are regressed. These analyses generally provide support for the contention central to the book.

Despite the appealing cross-regional comparison of three oil-exporting countries, and the use of the comparative method alongside large-n analysis, there are some areas of real concern in the research design and conceptual stages that cast doubt on the validity of Bayulgen's findings. The first has to do with the concept underlying the book's main hypotheses: hybrid regimes. Here, hybrid regime is used interchangeably with the degree of political competition and executive constraint, and the author states forcefully that such regimes are not viable as guarantors of foreign investments.

The idea that a combination of a) a strong executive and b) substantial political competition could provide an unstable environment is plausible. However, the use here of the term hybrid regime does not fit with a substantial literature on hybrid regimes (e.g., see Larry Diamond, “Thinking About Hybrid Regimes,” Journal of Democracy 13 [April 2002]: 21–35; Steven Levitsky and Lucan Way, Competitive Authoritarianism: Hybrid Regimes After the Cold War, 2010) that has demonstrated the coherence and durability of many such cases. As Diamond (2002, 24) notes, “Virtually all hybrid regimes in the world today are quite deliberately pseudodemocratic, in that the existence of formally democratic political institutions, such as multiparty electoral competition, masks (often, in part, to legitimate) the reality of authoritarian domination.”

What Bayulgen is on solid ground in arguing is simply that unstable regimes have a hard time attracting foreign investment: Witness the initial flight of FDI from Indonesia following Suharto's fall in May 1998 and its subsequent return. Cases such as Malaysia and Singapore—which most scholars place squarely in the hybrid regime camp—continue to draw much foreign investment and are also stably hybrid, combining elements of electoral procedure with periodically heavy-handed restriction of political competition. In short, the hybrid regime moniker is less appropriate than a reference to instability. On the other hand, the negative link between instability and foreign investment is already well established, and a reconfirmation of that finding would be unsurprising.

Another problematic assumption in the study is that all states want to bring in foreign investment, and this assumption runs into trouble when the author points to particular cases (i.e., Mexico, p. 25) of populist or nationalist regimes that actively sought to minimize or even chase out foreign investors. Hugo Chavez's Venezuela would fit this category as well, and these two cases at least direct us to think about the desire to attract FDI as a variable, not a constant. The size of Russia's economy relative to Azerbaijan and Norway, for example, might underlie a lesser need to bring in foreign investment.

Another important measurement problem relates to the multiple measures used to capture a country's success at attracting foreign investment. In discussing the three main cases, Azerbaijan, Norway, and Russia, Bayulgen uses FDI per capita (p. 34). Russia, unsurprisingly, ranks lowest here since its population is a dozen times the other two countries combined. Later, in Chapter 8, she uses net FDI, which produces results suggesting that, among oil exporters, her PCC variable is insignificant (p. 228). But if one compared her three main cases using net FDI rather than FDI per capita, Russia would appear to be the most successful, suggesting, in contrast to the book's argument, that its hybrid regime performed better than did consolidated regimes. The inconsistency of measures raises some substantive questions here since different measures result in completely different conclusions.

During the presentation of the empirics from the three cases, the author also refers to both Norway and Russia as “exceptions” or “outliers” (pp. 208 and 173, respectively). This raises a new set of questions: If two of three cases in a structured comparison fall substantially off the line in their oil-politics dynamics, it is reasonable to question whether they are the best cases to use in illustrating the argument's purchase? More ideally, we would see a set of cases chosen to represent the central dynamics in a theory of regime type and foreign investment. Finally, the rapid change in Russia's appeal to foreign investors—in just a few short years, Putin managed to reverse a decade of noncredible commitment problems—begs the question of the relative importance of regime type to the simpler question of how stable investors perceive any regime to be.

Foreign Investment and Political Regimes has raised a question of serious importance for the study of resource wealth and politics. In that light, the concerns about the book's conclusions should not detract from its value, and in raising this key question it advances the research program. At the same time, important questions remain on the table and in need of further empirical exploration. Why foreign investors flock into some countries but not others, and in particular into some oil sectors but not others, is a puzzle rightfully prioritized. Bayulgen is to be commended for providing scholars of oil politics with a first step in that direction.