Government, MNEs and Industry Development: A Perspective of Game Theory

Taotao Chen, Afonso Fleury, Maria Tereza Fleury and Xiao Chen
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Taotao Chen: School of Economics and Management, Tsinghua University, Beijing
Afonso Fleury: University of São Paulo, São Paulo
Maria Tereza Fleury: University of São Paulo, São Paulo
Xiao Chen: School of Economics and Management, Tsinghua University, Beijing

International Journal of Business and Economics, 2020, vol. 19, issue 1, 1-26

Abstract: This study analyzed the roles of government and MNEs in industrial development through the perspective of game theory based on the case of Brazilian automobile industry. First, we have confirmed that government and FDI could have positive effects on industrial development through a dynamic game process. Second, we confirmed the roles of import-substitution for establishing and export-promotion policy for upgrading industry in the context of dynamic game. Furthermore, we stressed some policies such as further opening-up, which was always neglected in static analysis. Third, we found that the bargaining power of the government primarily came from the advantages of the local market. The conclusion we explored may have the policy implication for developing countries especially for those who have huge local markets.

Keywords: business-government negotiation; inward FDI; MNEs; industrial development and growth; game theory (search for similar items in EconPapers)
JEL-codes: M16 M21 (search for similar items in EconPapers)
Date: 2020
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