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Thanks but no thanks: State-owned multinationals from emerging markets and host-country policies

Alvaro Cuervo-Cazurra ()
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Alvaro Cuervo-Cazurra: Northeastern University

Journal of International Business Policy, 2018, vol. 1, issue 3, 128-156

Abstract: Abstract I study the impact of the internationalization of state-owned companies from emerging markets on host-country government policy. Whereas the literature commonly recommends that host-country governments design policies to attract foreign direct investment, governments instead question or block investments by state-owned firms from emerging markets. I address this conflict between theory and practice by separating the causes of this behavior into six types depending on the characteristics of the firm (i.e., state ownership and emerging market origin) and the logic (i.e., economics, politics, and psychology). I suggest the development of ex-ante rule-based policies that provide clarity, address concerns, and support the benefits of inward investments, while limiting state capture by domestic interests. Thus, I explain how economic concerns over national security sectors and strategic technologies can be dealt with via exclusion, the political worries over opacity and weak governance can be addressed through monitoring, and the psychological anxieties of unfriendly governments and loss of relative status can be ameliorated using controls.

Keywords: State-owned firms; multinationals; policy; agency problems; strategic industries (search for similar items in EconPapers)
Date: 2018
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