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Privatization, strategic foreign direct investment and host-country welfare

journal contribution
posted on 23.05.2014 by Arijit Mukherjee, Kullapat Suetrong
Recent evidence shows that developing countries and transition economies are increasingly privatizing their public firms and at the same time experiencing rapid growth of inward foreign direct investment (FDI). We show that there is a two-way causality between privatization and greenfield FDI. Privatization increases the incentive for FDI, which, in turn, increases the incentive for privatization compared to the situation of no FDI. The optimal degree of privatization depends on the cost difference of the firms, and on the foreign firm's mode of entry.

History

School

  • Business and Economics

Department

  • Business

Citation

MUKHERJEE, A. and SUETRONG, K., 2009. Privatization, strategic foreign direct investment and host-country welfare. European Economic Review, 53 (7), pp. 775 - 785.

Publisher

© Elsevier B.V.

Version

VoR (Version of Record)

Publication date

2009

Notes

Closed access. This article was published in the European Economic Review and the definitive version is available at: http://dx.doi.org/10.1016/j.euroecorev.2009.02.004

ISSN

0014-2921

Language

en

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