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Multinational Investment Attraction: Principal-Agent Considerations

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Author Info
RAM MUDAMBI

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Abstract

Government agencies are becoming increasingly involved in the process of providing investment supports to attract foreign direct investment (FDI).This paper focuses on the problem of how best to structure the investment supports. Five different types of investment supports are theoretically and empirically analysed. In each case the effect of the principal-agent relationships between the MNE investor and the agency charged with attracting FDI are assessed in the strategic context. Theoretical analysis suggests that in some cases, governments may prefer support schemes that appear to be more expensive, but have better incentive or risk-sharing implications. Empirical analysis suggests that MNE firm characteristics are related to the type of investment support package obtained.

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Publisher Info
Article provided by Taylor and Francis Journals in its journal International Journal of the Economics of Business.

Volume (Year): 6 (1999)
Issue (Month): 1 (February)
Pages: 65-79
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Handle: RePEc:taf:ijecbs:v:6:y:1999:i:1:p:65-79

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Related research
Keywords: Government Investment Supports Mne Investment Location Principal Agent Theory;

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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.:
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  3. de Meza, David, 1979. "Commercial Policy Towards Multinational Monopolies-Reservations on Katrak," Oxford Economic Papers, Oxford University Press, vol. 31(2), pages 334-37, July. [Downloadable!] (restricted)
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  6. Thaler, Richard H, 1988. "Anomalies: The Winner's Curse," Journal of Economic Perspectives, American Economic Association, vol. 2(1), pages 191-202, Winter. [Downloadable!] (restricted)
  7. Huberman, Gur & Kahn, Charles M., 1988. "Strategic renegotiation," Economics Letters, Elsevier, vol. 28(2), pages 117-121. [Downloadable!] (restricted)
  8. Stephen Young & Neil Hood & Ewen Peters, 1994. "Multinational Enterprises and Regional Economic Development," Regional Studies, Taylor and Francis Journals, vol. 28(7), pages 657-677, November. [Downloadable!] (restricted)
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  16. Collie, David, 1992. "Export Subsidies, Entry Deterrence and Countervailing Tariffs," The Manchester School of Economic & Social Studies, Blackwell Publishing, vol. 60(2), pages 136-51, June.
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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. Robert Pearce, 2001. "Multinationals and Industrialisation: The Bases of ‘Inward Investment’ Policy," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 8(1), pages 51-73, February. [Downloadable!] (restricted)
  2. José Guimón, 2009. "Government strategies to attract R&D-intensive FDI," The Journal of Technology Transfer, Springer, vol. 34(4), pages 364-379, August. [Downloadable!] (restricted)
  3. Filip De Beule & Ilke Van Beveren, 2009. "Multinational ownership and R&D intensity: The role of external knowledge sources and spillovers," LICOS Discussion Papers 24209, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
  4. Haaland, Jan I. & Wooton, Ian, 2002. "Multinational Investment, Industry Risk and Policy Competition," CEPR Discussion Papers 3152, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  5. Haaland, Jan I. & Wooton, Ian, 2001. "Multinational Firms: Easy Come, Easy Go?," CEPR Discussion Papers 2660, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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