Mode of Entry and Expropriation

Konferenzbeitrag

We develop a politico-economic model to analyze the relationship between mode of entry into a new market and institutional quality of the host country. A foreign investor can either purchase a domestic firm, what we consider as FDI, or form a joint venture, in which the control right over the firm rests with the domestic entrepreneur. In an autocratic regime, the ruling elite uses its political power to implement expropriatory policies. In an integrated firm the risk of expropriation targets the foreign investor whereas in a joint venture the domestic agent bears this risk. We determine the equilibrium level of the probability of expropriation and show that the ruling elite, by choosing it, discriminates in favor of the foreign investor. This has implications for the form of invested capital, and thus for the organizational structure of active firms in the host country.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Proceedings of the German Development Economics Conference, Hannover 2010 ; No. 27

Klassifikation und Themen

• Klassifikation: Wirtschaft ; International Investment; Long-term Capital Movements ; Firm Organization and Market Structure ; Other Economic Systems: Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
• Thema: Foreign direct investments ; joint ventures ; property rights ; expropriation

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Dadasov, Ramin ; Lorz, Jens Oliver
• Ereignis: Veröffentlichung
• (wer): Verein für Socialpolitik, Ausschuss für Entwicklungsländer
• (wo): Göttingen
• (wann): 2010

Weitere Informationen

• Handle: http://hdl.handle.net/10419/40004
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ