Foreign direct investment and host country policies: A rationale for using ownership restrictions

• 成果类型: Article
• 署名作者: Karabay, Bilgehan
• 署名单位: University of Auckland
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2009.11.003
• 发表日期: 2010
• 页码: 218-225
• 关键词: ownership; FDI; multinationals; regulation; asymmetric information

摘要

This paper examines host governments' motivation for restricting ownership shares of multinational firms (MNFs) in foreign direct investment (FDI) projects. An MNF with a productivity advantage is willing to invest in a host country. The host government wants to capture the MNF's surplus yet cannot observe it due to the MNF's private information about its firm-specific advantage. In contrast, a joint venture (JV) partner might observe this surplus depending on its ownership share. The host government can alleviate its informational constraints by using ownership restrictions to force a JV. This calls into question the wisdom of calls for 'liberalizing' FDI flows by the wholesale elimination of domestic JV requirements. We show that the optimal mechanism involves ownership restrictions that decrease as the size of the MNF's firm-specific advantage increases. (C) 2009 Elsevier B.V. All rights reserved.