Big Projects in Small Economies: The Determinants of Sovereign Risk and Its Control

Sean J. Hinton, Brian S. Fisher and Anna M. Fisher

Chapter 11 in Emerging Markets and Sovereign Risk, 2015, pp 195-212 from Palgrave Macmillan

Abstract: Abstract In the search for untapped economically viable natural resources, the extractive industry is increasingly being forced to target larger, more capital-intensive projects in less developed countries. Such mega-projects can have a transformative impact, good or bad, on small host economies. The nature of such projects, and the way that they are typically structured and developed, unintentionally leads to specific economic problems that put pressure on host governments and project developers alike. Conventional approaches can lead to higher risk of expropriation, widespread and destructive rent-seeking behaviour, and intensified corruption. In projects of significant scale relative to the host economy, these unintended effects can lead to an increase in the overall level of sovereign risk in the territory.

Keywords: Foreign Direct Investment; Gross Domestic Product; Project Developer; Capital Allocation; Small Economy (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-45066-1_11

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DOI: 10.1057/9781137450661_11

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