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Foreign Direct Investment And The Risk Of Expropriation

Listed author(s):
  • THOMAS, J.
  • WORRALL, T.

Foreign direct investment accounts for a considerable proportion of international capital flows. In 1986 the flow of foreign direct investment from developed market economies to developing countries was $12.5 billion or roughly one-half of all private capital flows from the developed to the developing nations (and roughly one-quarter of the flow of all foreign direct investments). Its significance for developing countries may even grow in the future as debt is swapped for equity (see Pollio and Riemschneider, 1988). The most important sector in volume term is the manufacturing sector, the concern of this paper. In 1978 total stocks of manufacturing foreign direct investment accounted for roughly two-thirds of the total in less developed countries, with just one-eighth devoted to the extractive industries (see Stopford and Dunning, 1983, p.22).

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File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/1989-1994/twerp342.pdf
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Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 342.

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Length: 32 pages
Date of creation: 1990
Handle: RePEc:wrk:warwec:342
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Web page: http://www2.warwick.ac.uk/fac/soc/economics/

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  1. Hart, Oliver D & Moore, John, 1988. "Incomplete Contracts and Renegotiation," Econometrica, Econometric Society, vol. 56(4), pages 755-785, July.
  2. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
  3. Bulow, Jeremy & Rogoff, Kenneth, 1989. "Sovereign Debt: Is to Forgive to Forget?," American Economic Review, American Economic Association, vol. 79(1), pages 43-50, March.
  4. Farrell, Joseph & Maskin, Eric, 1989. "Renegotiation in repeated games," Games and Economic Behavior, Elsevier, vol. 1(4), pages 327-360, December.
  5. Crawford, Vincent P, 1988. "Long-term Relationships Governed by Short-term Contracts," American Economic Review, American Economic Association, vol. 78(3), pages 485-499, June.
  6. Williams, M L, 1975. "The Extent and Significance of the Nationalization of Foreign-owned Assets in Developing Countries, 1956-1972," Oxford Economic Papers, Oxford University Press, vol. 27(2), pages 260-273, July.
  7. Bond, Eric W & Samuelson, Larry, 1986. "Tax Holidays as Signals," American Economic Review, American Economic Association, vol. 76(4), pages 820-826, September.
  8. Jonathan Thomas & Tim Worrall, 1988. "Self-Enforcing Wage Contracts," Review of Economic Studies, Oxford University Press, vol. 55(4), pages 541-554.
  9. Kobrin, Stephen J., 1987. "Testing the bargaining hypothesis in the manufacturing sector in developing countries," International Organization, Cambridge University Press, vol. 41(04), pages 609-638, September.
  10. Jenkins, Barbara, 1986. "Reexamining the “obsolescing bargain”: a study of Canada's National Energy Program," International Organization, Cambridge University Press, vol. 40(01), pages 139-165, December.
  11. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
  12. Tirole, Jean, 1986. "Procurement and Renegotiation," Journal of Political Economy, University of Chicago Press, vol. 94(2), pages 235-259, April.
  13. Grout, Paul A, 1984. "Investment and Wages in the Absence of Binding Contracts: A Nash Bargining Approach," Econometrica, Econometric Society, vol. 52(2), pages 449-460, March.
  14. Kobrin, Stephen J., 1980. "Foreign enterprise and forced divestment in LDCs," International Organization, Cambridge University Press, vol. 34(01), pages 65-88, December.
  15. Abreu, Dilip & Pearce, David & Stacchetti, Ennio, 1986. "Optimal cartel equilibria with imperfect monitoring," Journal of Economic Theory, Elsevier, vol. 39(1), pages 251-269, June.
  16. Laffont, Jean-Jacques & Tirole, Jean, 1988. "The Dynamics of Incentive Contracts," Econometrica, Econometric Society, vol. 56(5), pages 1153-1175, September.
  17. Eaton, Jonathan & Gersovitz, Mark, 1984. "A Theory of Expropriation and Deviations from Perfect Capital Mobility," Economic Journal, Royal Economic Society, vol. 94(373), pages 16-40, March.
  18. Long, Ngo Van, 1975. "Resource extraction under the uncertainty about possible nationalization," Journal of Economic Theory, Elsevier, vol. 10(1), pages 42-53, February.
  19. J. P. Gould, 1968. "Adjustment Costs in the Theory of Investment of the Firm," Review of Economic Studies, Oxford University Press, vol. 35(1), pages 47-55.
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