Repeated Expropriation Contests and Foreign Direct Investment

25 Pages Posted: 28 Feb 2001

See all articles by Kai A. Konrad

Kai A. Konrad

Max Planck Institute for Tax Law and Public Finance; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); IZA Institute of Labor Economics

Date Written: February 2001

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: Confiscatory Taxation, Conflict, Expropriation, Foreign Direct Investment, Fractionalization, Nationalization

Suggested Citation

Konrad, Kai A., Repeated Expropriation Contests and Foreign Direct Investment (February 2001). CEPR Discussion Paper No. 2695, Available at SSRN: https://ssrn.com/abstract=261870

Kai A. Konrad (Contact Author)

Max Planck Institute for Tax Law and Public Finance ( email )

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Germany

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Centre for Economic Policy Research (CEPR)

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CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Germany

IZA Institute of Labor Economics

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Germany

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