00000nam 2200000za 4500 9.833275 CaOODSP 20221107150203 cr ||||||||||| 170302s2017 oncd ob f000 0 eng d CaOODSP eng eng fre n-cn--- FB3-5/2017-9E-PDF Akhtaruzzaman, Muhammad. Expropriation risk and FDI in developing countries [electronic resource] : does return of capital dominate return on capital? / by M. Akhtaruzzaman, Nathan Berg and Christopher Hajzler. [Ottawa] : Bank of Canada, 2017. ii, 57, [12] p. : chart Bank of Canada staff working paper, 1701-9397 ; 2017-9 "February 2017." Includes bibliographical references (p. 39-45). “Previously reported effects of institutional quality and political risks on foreign direct investment (FDI) are mixed and, therefore, difficult to interpret. We present empirical evidence suggesting a relatively clear, statistically robust, and intuitive characterization. Institutional factors that affect the likelihood of an abrupt and total loss of foreigners’ capital (i.e., return of capital) dominate those that affect rates of return conditional on a strictly positive terminal investment value (i.e., return on capital). A one-standard deviation reduction in expropriation risk is associated with a 72 per cent increase in FDI, which is substantially larger than the effects of any other dimensions of institutional quality simultaneously controlled for in our empirical models of FDI inflows. This evidence is consistent with the predictions of a standard theory of FDI under imperfect contract enforcement. We show in the context of a simple model with endogenous expropriation that, when there is a binding threat of expropriation, foreign investors can become unresponsive to differences in other dimensions of institutions and political risk, and may even reduce optimal investment as these institutions improve"--Abstract, p. ii. Includes abstract in French. gccst Developing countries gccst Foreign investments gccst Expropriation Berg, Nathan, 1972- Hajzler, Christopher M. Bank of Canada. Staff working paper (Bank of Canada) 1701-9397 ; 2017-9 (CaOODSP)9.806221 PDF 733 KB https://publications.gc.ca/collections/collection_2017/banque-bank-canada/FB3-5-2017-9-eng.pdf