Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/102361
Authors: 
Dadasov, Ramin
Hefeker, Carsten
Lorz, Oliver
Year of Publication: 
2014
Series/Report no.: 
Joint Discussion Paper Series in Economics 36-2014
Abstract: 
We develop a formal model that looks at the mutually endogenous determination of foreign direct investments in natural resource-rich countries, the decision of host governments to expropriate these investments, and the level of corruption. Higher resource production makes expropriation more attractive from the perspective of national governments. A low expropriation risk is in turn an important determinant of international investments and is therefore associated with high levels of production. Moreover, resource production leads to high levels of corruption. Our theoretical results are confirmed by estimations of a simultaneous equation model for 50 resource-rich countries in which we endogenize expropriation risk, corruption, and resource production.
Subjects: 
Natural resources
hold-up problem
foreign direct investment
corruption
JEL: 
F21
D73
Q38
Document Type: 
Working Paper

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