Foreign Direct Investments and trade in agriculture: an incomplete contracts approach
No hay miniatura disponible
Fecha
Autores
Título de la revista
ISSN de la revista
Título del volumen
Editor
Resumen
Descripción
Despite the attention given in recent years to the growth of foreign land acquisitions, there
have been few studies investigating the pattern of recent Foreign Direct Investment (FDI) in
agriculture and the ones that have are mostly focused on the locational drivers of FDI. This
paper explores how the contractual features of transactions of agricultural products affect the
“internalization” decision of firms, that is, the choice trade/FDI. The paper develops a
partial equilibrium model incorporating incomplete contracts and asset specificity, which is
used to address a number of questions: What is the impact of the quality of the institutions on
the choice trade/FDI? How may the bargaining power of the downstream and upstream firms
affect the outcome? How is the choice FDI/trade affected by the presence of a state–owned
firm? The model provides some uncommon results, such as the finding that when the investor
is private, weak institutions may promote FDI.