This paper analyses the underinvestment problem in less developed countries (LDCs) characterized by political uncertainty. It is shown that both the strategic use of foreign debt and direct foreign investment can reduce the extent of underinvestment, determined by insecure property rights, when international sanctions are operative. In particular, foreign debt may be the most effective tool to increase the investors' share and promote physical capital accumulation. Copyright (C) 2000 John Wiley & Sons, Ltd.
Giancarlo, M., Dalmazzo, A. (2000). Foreign debt, sanctions and investment: a model with politically-unstable Less developed Countries. INTERNATIONAL JOURNAL OF FINANCE & ECONOMICS, 5(2), 141-153 [10.1002/(SICI)1099-1158(200004)5:2<141::AID-IJFE119>3.0.CO;2-A].
Foreign debt, sanctions and investment: a model with politically-unstable Less developed Countries
DALMAZZO, ALBERTO
2000-01-01
Abstract
This paper analyses the underinvestment problem in less developed countries (LDCs) characterized by political uncertainty. It is shown that both the strategic use of foreign debt and direct foreign investment can reduce the extent of underinvestment, determined by insecure property rights, when international sanctions are operative. In particular, foreign debt may be the most effective tool to increase the investors' share and promote physical capital accumulation. Copyright (C) 2000 John Wiley & Sons, Ltd.
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https://hdl.handle.net/11365/17477
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