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Repeated Expropriation Contests and Foreign Direct Investment

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  • Konrad, Kai A.

Abstract

This Paper considers the incentives for foreign direct investment in transformation countries if actual expropriation is the possible result of a conflict between multinational firms and local or national governments. The Paper compares threats of complete expropriation and of repeated period-revenue confiscation. The Paper also shows that the timing of efforts in the contests is essential for the size of underinvestment. Short term commitment as regards timing can lead to first-best investment levels.

Suggested Citation

  • Konrad, Kai A., 2001. "Repeated Expropriation Contests and Foreign Direct Investment," CEPR Discussion Papers 2695, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:2695
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    References listed on IDEAS

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    Cited by:

    1. Sebastian G. Kessing, 2006. "Employment Protection and Product Market Competition," Scandinavian Journal of Economics, Wiley Blackwell, pages 339-352.

    More about this item

    Keywords

    Confiscatory Taxation; Conflict; Expropriation; Foreign Direct Investment; Fractionalization; Nationalization;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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