Bargaining with Multi-Nationals

Paul Streeten

Chapter 15 in Development Perspectives, 1981, pp 298-302 from Palgrave Macmillan

Abstract: Abstract It is not uncommon in the literature on private foreign investment to assume a downward-sloping marginal productivity of investment curve, relating different amounts of investment by the multinational company (MNC) to expected rates of return (Fig. 15.1). It then follows that any action by the host government that reduces the expected rate of return is bound to lead to reduced investment. The host government will have to balance, at the margin, more or less foreign investment (OA against OB) against less or more tax receipts or other benefits to it that reduce the attractions to the foreign investor (e.g. the use of higher-cost inputs such as local materials, or restrictions on repatriation of profits). This model has dominated thought and, to some extent, action in this area.

Keywords: Host Country; Capital Expenditure; Multinational Company; Host Government; Global Operation (search for similar items in EconPapers)
Date: 1981
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DOI: 10.1007/978-1-349-05341-4_15

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