Repeated Expropriation Contests and Foreign Direct Investment

Kai Konrad

No 2695, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This Paper considers the incentives for foreign direct investment in transformation countries if actual expropriation is the possible result of a conflict between multinational firms and local or national governments. The Paper compares threats of complete expropriation and of repeated period-revenue confiscation. The Paper also shows that the timing of efforts in the contests is essential for the size of underinvestment. Short term commitment as regards timing can lead to first-best investment levels.

Keywords: investment; Conflict; Foreign direct investment; Expropriation; Fractionalization; Nationalization; confiscatory taxation (search for similar items in EconPapers)
JEL-codes: F21 F23 G15 H87 (search for similar items in EconPapers)
Date: 2001-02
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Citations: View citations in EconPapers (2)

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