RATIONALIZING PUBLIC PRIVATE JOINT VENTURES IN AN OPEN-ECONOMY - A STRATEGIC APPROACH

This paper analyzes the problem of foreign investment in a less developed country where the threat of expropriation leads necessarily to withholding of technological knowledge of the foreign firm. In a dynamic model it is shown that if the political authority of the host country shares the investment, chances are high that the multinational will be willing in such a venture. Sharing of investments by the political authority serves as credible precommitment against future nationalization. © 1990.