Ownership Structure In Foreign Direct Investment Projects

Elizabeth Asiedu and Hadi Esfahani ()

The Review of Economics and Statistics, 2001, vol. 83, issue 4, 647-662

Abstract: This paper theoretically and empirically examines ownership structure in foreign direct investment (FDI) projects. We show that in choosing an ownership structure, foreign investors, local entrepreneurs, and government consider the specific, costly-to-market assets that the participants and the country bring to the project. In equilibrium, the foreign equity share rises with the importance of foreign investor assets and declines with the contribution of local assets towards the amount of surplus generated in the project. Government policies and the institutional structure of the country also affect ownership structure. © 2001 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Date: 2001
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