Mode of international investment and endogenous risk of expropriation

Arbeitspapier

In this paper, we develop a politico-economic model to analyze the relationship between the mode of international investment and institutional quality in a non-democratic capital importing country. Foreign investors from a capital-rich North can either purchase productive assets in a capital-poor South and transfer their capital within integrated multinational firms or they can form joint ventures with local asset owners. The South is ruled by an autocratic elite that may use its political power to expropriate productive assets. In a joint venture, the domestic asset owner bears the risk of expropriation, whereas in an integrated firm, this risk affects the foreign investor. This effect lowers the incentives for specific investments in an integrated firm and distorts the decision between joint ventures and integrated production. By setting the institutional framework in the host country, the elite in uences the risk of expropriation. We determine the equilibrium risk of expropriation in this framework and the resulting pattern of international production. We also analyze as to how globalization, which is reflected in a decline in investment costs, in influences institutional quality.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: MAGKS Joint Discussion Paper Series in Economics ; No. 35-2010

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 investment ; joint venture ; property rights ; expropriation ; Direktinvestition ; Joint Venture ; Kapitalimport ; Eigentumsrecht ; Politisches System ; Institutionelle Infrastruktur ; Kleines-offenes-Land ; Nord-Süd-Beziehungen ; Theorie

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Dadasov, Ramin ; Lorz, Oliver
• Ereignis: Veröffentlichung
• (wer): Philipps-University Marburg, Faculty of Business Administration and Economics
• (wo): Marburg
• (wann): 2010

Weitere Informationen

• Handle: http://hdl.handle.net/10419/56557
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ