Privatization, Incentive Delegation and Foreign Direct Investment

Arijit Mukherjee and Kullapat Suetrong

Open Economies Review, 2013, vol. 24, issue 4, 657-676

Abstract: Despite the empirical relevance, the privatization literature paid little attention to the effects of the owner-manager relationship and the implications of foreign direct investment (FDI). We focus on these aspects, and show the relationship between privatization and greenfield FDI when the owners design strategic managerial incentive contracts. We show that there is complementarity between privatization and greenfield FDI. Whether incentive delegation (compared to no incentive delegation) increases the degree of privatization in the presence of FDI is ambiguous; it depends on whether the degree of privatization that attracts FDI is higher or lower than the degree of privatization that maximizes domestic welfare under FDI. Copyright Springer Science+Business Media New York 2013

Keywords: Privatization; Greenfield FDI; Welfare; Incentive contract; D43; F12; F13; F23; L13; L33; O25 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1007/s11079-012-9251-7 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:openec:v:24:y:2013:i:4:p:657-676

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/11079/PS2

DOI: 10.1007/s11079-012-9251-7

Access Statistics for this article

Open Economies Review is currently edited by G.S. Tavlas

More articles in Open Economies Review from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().