This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Foreign direct investment, political resentment and the privatization process in eastern Europe

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Hans-Werner Sinn
Alfons J. Weichenrieder

Additional information is available for the following registered author(s):

Abstract

Foreign direct investment has been disappointingly low in eastern Europe, which has been reluctant to make existing assets available to foreign investors. To mitigate any such resentment, we propose a participation model in which foreign investors compete for joint venture contracts. Host governments contribute existing assets and receive non-voting stocks. Foreign investors, contributing capital and know-how, receive voting shares and control of operational decisions.{}This has several advantages over the cash sale of assets to foreigners. First, stock flow problems are eased, raising both asset prices and FDI flows. Second, by retaining some stake in the firm, transition countries share in the risk premium. Third, governments can hand over their shares to households, creating private collateral to foster new small businesses. Fourth, and crucially, compared to cash sales the auction of participation contracts offers higher privatization revenues in cases where governments cannot assess investors' knowledge and abilities. This reduces the risk of selling the family silver too cheaply, and should alleviate the host countries' resentment. Copyright Centre for Economic Policy Research, Centre for Economic Studies, Maison des Sciences de l'Homme 1997.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help file. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.blackwell-synergy.com/servlet/useragent?func=synergy&synergyAction=showTOC&journalCode=ecop&volume=12&issue=24&year=1997&part=null
File Format: text/html
File Function: link to full text
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Publisher Info
Article provided by CEPR, CES, MSH in its journal Economic Policy.

Volume (Year): 12 (1997)
Issue (Month): 24 (04)
Pages: 177-210
Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Handle: RePEc:bla:ecpoli:v:12:y:1997:i:24:p:177-210

Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0266-4658

Order Information:
Web: http://www.blackwellpublishing.com/subs.asp?ref=0266-4658

For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).

Related research
Keywords:

Other versions of this item:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. P Krugman & A Venables, 1993. "Intergration," CEP Discussion Papers 0172, Centre for Economic Performance, LSE.
  2. Weichenrieder, Alfons J, 1996. " Transfer Pricing, Double Taxation, and the Cost of Capital," Scandinavian Journal of Economics, Blackwell Publishing, vol. 98(3), pages 445-52.
  3. Samuelson, William, 1987. "Auctions with Contingent Payments: Comment," American Economic Review, American Economic Association, vol. 77(4), pages 740-45, September. [Downloadable!] (restricted)
  4. Cremer, Jacques, 1987. "Auctions with Contingent Payments: Comment," American Economic Review, American Economic Association, vol. 77(4), pages 746, September.
  5. Hansen, Robert G, 1985. "Auctions with Contingent Payments," American Economic Review, American Economic Association, vol. 75(4), pages 862-65, September. [Downloadable!] (restricted)
  6. Chander Kant, 1995. "Minority Ownership, Deferral, Perverse Intrafirm Trade And Tariffs," International Economic Journal, Korean International Economic Association, vol. 9(1), pages 19-37, April. [Downloadable!] (restricted)
  7. R. Preston McAfee & John McMillan, 1986. "Bidding for Contracts: A Principal-Agent Analysis," RAND Journal of Economics, The RAND Corporation, vol. 17(3), pages 326-338, Autumn. [Downloadable!] (restricted)
  8. Riley, John G, 1988. "Ex Post Information in Auctions," Review of Economic Studies, Blackwell Publishing, vol. 55(3), pages 409-29, July. [Downloadable!] (restricted)
    Other versions:
  9. Bond, Eric W & Samuelson, Larry, 1989. "Strategic Behaviour and the Rules for International Taxation of Capital," Economic Journal, Royal Economic Society, vol. 99(398), pages 1099-1111, December. [Downloadable!] (restricted)
    Other versions:
  10. Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W., 1994. "Voucher privatization," Journal of Financial Economics, Elsevier, vol. 35(2), pages 249-266, April. [Downloadable!] (restricted)
    Other versions:
  11. Wolfstetter, Elmar, 1996. " Auctions: An Introduction," Journal of Economic Surveys, Blackwell Publishing, vol. 10(4), pages 367-420, December.
    Other versions:
  12. Jonathan Eaton & Mark Gersovitz, 1984. "A Theory of Expropriation and Deviations From Perfect Capital Mobility," NBER Working Papers 0972, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Clemens Fuest & Bernd Huber & Jack Mintz, 2003. "Capital Mobility and Tax Competition: A Survey," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
  2. Carlo Altomonte & Enrico Pennings, . "The Hazard Rate of Foreign Direct Investment: A Structural Estimation of a Real Option Model," Working Papers 259, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University. [Downloadable!]
    Other versions:
  3. Johnson, Andreas, 2006. "FDI inflows to the Transition Economies in Eastern Europe: Magnitude and Determinants," Working Paper Series in Economics and Institutions of Innovation 59, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies. [Downloadable!]
  4. Hans-Werner Sinn, 1996. "International Implications of German Unification," NBER Working Papers 5839, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Schröder, Philipp J.H., 2000. "On Privatisation and Restructuring," MPRA Paper 89, University Library of Munich, Germany, revised 2006. [Downloadable!]
  6. Lutz, Stefan H. & Talavera, Oleksandr, 2003. "Do Ukrainian Firms Benefit from FDI?," ZEW Discussion Papers 03-05, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
    Other versions:
  7. Adam Swain, 1998. "Governing the Workplace: The Workplace and Regional Development Implications of Automotive Foreign Direct Investment in Hungary," Regional Studies, Taylor and Francis Journals, vol. 32(7), pages 653-671, October. [Downloadable!] (restricted)
  8. Sinn, Hans-Werner, 1999. "Inflation and Welfare: Comment on Robert Lucas," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
  9. Philipp J.H. Schroeder, . "The Fiscal Constraint to Restructuring of Firms in Transition Economies," Economics Working Papers 1998-2, School of Economics and Management, University of Aarhus. [Downloadable!]
  10. Josef C. Brada & Ali M. Kutan & Taner M. Yigit, 2004. "The Effects of Transition and Political Instability On Foreign Direct Investment Inflows: Central Europe and the Balkans," William Davidson Institute Working Papers Series wp729, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  11. Enrico Pennings, . "How to Maximize Domestic Benefits from Irreversible Foreign Investments," Working Papers 205, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University. [Downloadable!]
Statistics
Access and download statistics

Did you know? RePEc also has a blog.

This page was last updated on 2008-10-26.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.