Does foreign aid mitigate the adverse effect of expropriation risk on foreign direct investment?

• 成果类型: Article
• 署名作者: Asiedu, Elizabeth; Jin, Yi; Nandwa, Boaz
• 署名单位: Monash University; University of Kansas; Yale University
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2009.03.004
• 发表日期: 2009
• 页码: 268-275
• 关键词: Expropriation; Foreign aid; FDI; RISK; Sub-Saharan Africa

摘要

We construct a model of FDI, risk and aid, where a country loses access to FDI and aid if the country expropriates FDI. We show that: (i) the threat of expropriation leads to under-investment; (ii) the optimal level of FDI decreases as the risk of expropriation rises; and (iii) aid mitigates the adverse effect of expropriation risk on FDI. The empirical analysis employs data for 35 low-income countries and 28 countries in Sub-Saharan Africa, over the period 1983-2004. We find that risk has a negative effect on FDI and that aid mitigates but cannot eliminate the adverse effect of risk. (C) 2009 Elsevier B.V. All rights reserved.