scholarly journals The Effects of Abandonment Options on Investment Timing and Profit Sharing of FDI

2017 ◽  
Vol 2017 ◽  
pp. 1-11
Author(s):  
Weiwei Zhang ◽  
Minggao Xue
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Real Option ◽  
Optimal Investment ◽  
International Investment ◽  
Profit Sharing ◽  
Negative Effects ◽  
Investment Timing ◽  
Real Option Method ◽  
Profit Share

The paper incorporates cooperative game theory into a real option method in a foreign direct investment setting and examines the operational decisions of a multinational corporation in a cooperative framework, where the corporation is endowed with an abandonment option and shares its profit with the host country. In particular, we investigate how the abandonment options affect the optimal investment timing and the optimal profit share of a foreign direct investment using a real option game method. We show that the flexibility of the abandonment option induces the corporation to investment earlier, which indicates the negative effects on investment trigger. The result is consistent with intuition since the abandonment option provides insurance and thus reduces the overall risk of the project. We also find that the introduction of the abandonment option reduces the optimal profit share in a cooperative framework and in turn the lower profit share increases the investment trigger, thereby having a positive effect on the investment threshold to hinder the investment. By numerical analysis, we find that the overall effect of the abandonment options is inversely related to the investment trigger. These findings provide quantitative analysis about the decisions regarding cooperation in international investment extraction projects.

scholarly journals FEATURES OF GLOBAL INVESTMENT POLICY: MODERN TRENDS AND PROSPECTS

2019 ◽  
pp. 142-148
Author(s):  
Larisa Germanovna Chuvakhina
Keyword(s):  
Foreign Direct Investment ◽  
Foreign Investment ◽  
Direct Investment ◽  
World Economy ◽  
International Investment ◽  
Investment Policy ◽  
Investment Promotion ◽  
The Us ◽  
The World

The article highlights the current problems of investments in the development of the world economy, when international investment needs are significantly high. The priority is given to the issues of investment resources for achieving the goals of sustainable development of the world economy. It has been stated that for creating the effective economic policy, the countries need to attract foreign investment. The current trends in the development of global market for foreign direct investment flows are examined. The flows of global foreign direct investment in 2017-2018 are analyzed. Special attention is given to the study of the US investment policy. The reduction in US investments into the Russian economy in terms of the sanctions policy against Russia is marked. The changes in the investment policy of the administration of D. Trump in terms of strengthening American protectionism are underlined. The issues of US-EU investment cooperation are considered. The role of the US Federal Reserve in regulating the activities of foreign companies in the US market is defined. The main decisions taken at the X World Investment Forum of the United Nations Conference on Trade and Development in October, 2018 are considered. The role of investment promotion agencies is defined as one of the tools to attract foreign investments into the country's economy. The decrease in the level of international investment and increased competition between countries for attracting foreign investment is stated. The study confirms that the investment attractiveness of the country, stability of the national financial system, and legal security of business play a decisive role in attracting foreign direct investment.

scholarly journals Chinese Foreign Direct Investment and Human Rights in Kenya: A Mutually-Affirming Relationship?

2021 ◽  
Vol 2 (1) ◽  
pp. 133-154
Author(s):  
Rosemary Mwanza
Keyword(s):  
Human Rights ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
International Investment ◽  
Reciprocal Relationship ◽  
Human Rights Protection ◽  
Rights Protection ◽  
Investment Arbitration ◽  
Human Rights Norms ◽  
Chinese Foreign Direct Investment

Does the increase in Chinese foreign direct investment (FDI) inflows into Kenya portend doom for human rights in the country? The prominent narrative has been that FDI undermines human rights in host states, especially those in the developing world. This narrative is countered by claims that there exists a mutually affirming relationship between FDI and human rights. Proponents of this view posit that FDI facilitates the diffusion of human rights norms and correlates with the improved rule of law in host states. They also point to emerging human rights jurisprudence in international investment arbitration as evidence of a reciprocal relationship between FDI and human rights. In light of these arguments, this paper analyses the extent to which such a reciprocal relationship bears out between Chinese FDI and human rights in Kenya. It will be demonstrated that given the lack of a framework for human rights accountability for corporations at the international level, the restrictive treatment of human rights in international investment arbitration tribunals and weak institutional capacity in host states, a positive overlap between FDI and human rights is hardly a panacea for human rights protection in Kenya. Therefore, a synergy of legal measures and non-legal measures provide a pragmatic approach to insulate human rights from violations that may be associated with Chinese FDIs.

A Physics of Organizational Uncertainty

2011 ◽  
pp. 268-289 ◽  
Author(s):  
W. F. Lawless ◽  
M. Bergman ◽  
N. Feltovich
Keyword(s):  
Foreign Direct Investment ◽  
Steady State ◽  
Direct Investment ◽  
Multinational Enterprise ◽  
Capital Controls ◽  
Developed Countries ◽  
Foreign Subsidiaries ◽  
Negative Effects ◽  
The Us ◽  
Organizational Uncertainty

This chapter constructs a dynamic model of a multinational enterprise (MNE) to quantify the effects of various capital control policies on a firm’s debt and equity positions, innovations, and outputs at the headquarters and subsidiary. The model is calibrated to the US Foreign Direct Investment (FDI) Benchmark Survey and the IMF’s Exchange Arrangements and Exchange Restrictions so that it reproduces the average US FDI and technology flows to foreign subsidiaries. Both steady-state and transition analyses suggest a significant impact of capital controls on an MNE’s operations. Lifting capital restrictions produces an inflow of capital and technology into the less developed countries, leading to an increase in the steady-state FDI position and production. Simulation experiments reveal that even short-term capital controls have long-lasting negative effects.

Capital Controls and Firm's Dynamics

2011 ◽  
pp. 235-267
Author(s):  
Alexei G. Orlov
Keyword(s):  
Foreign Direct Investment ◽  
Steady State ◽  
Direct Investment ◽  
Multinational Enterprise ◽  
Capital Controls ◽  
Developed Countries ◽  
Foreign Subsidiaries ◽  
Capital Control ◽  
Negative Effects ◽  
The Us

This chapter constructs a dynamic model of a multinational enterprise (MNE) to quantify the effects of various capital control policies on a firm’s debt and equity positions, innovations, and outputs at the headquarters and subsidiary. The model is calibrated to the US Foreign Direct Investment (FDI) Benchmark Survey and the IMF’s Exchange Arrangements and Exchange Restrictions so that it reproduces the average US FDI and technology flows to foreign subsidiaries. Both steady-state and transition analyses suggest a significant impact of capital controls on an MNE’s operations. Lifting capital restrictions produces an inflow of capital and technology into the less developed countries, leading to an increase in the steady-state FDI position and production. Simulation experiments reveal that even short-term capital controls have long-lasting negative effects.

Malaysia and Investor-State Dispute Settlement: Learning From Experience

2017 ◽  
Vol 18 (5-6) ◽  
pp. 890-917 ◽  
Author(s):  
Sufian Jusoh ◽  
Muhammad Faliq Abd Razak ◽  
Mohamad Azim Mazlan
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Dispute Settlement ◽  
International Investment ◽  
Learning From Experience ◽  
International Investment Law ◽  
Investment Law ◽  
Investment Treaties

Abstract Malaysia is an important destination for foreign direct investment and has signed more than 70 investment guarantee agreements. Most allow investor-state dispute settlement (ISDS) and Malaysia has been subject to three claims, including two fully argued cases: Philippe Gruslin and Malaysian Historical Salvor. Yet Malaysian companies have also utilised ISDS provisions: in MTD Equity Bhd v Chile, Telekom Malaysia v Ghana, and Ekran Berhad v China (the first-ever ISDS claim against China). These cases provide lessons for Malaysia in becoming better prepared to negotiate newer generations of investment treaties, and to defend further potential cases. Malaysia has not reacted negatively to investment treaties despite the cases filed against the country. In fact, in light of its evolving interests Malaysia has become more of a rule-maker in international investment law rather than a rule-taker. Malaysia thereby continues to liberalise its investment regime and provide better transparency – the best defence against claims.

International Investment Law and Practice in the Kingdom of Cambodia: An Evolving ‘Rule Taker’?

2017 ◽  
Vol 18 (5-6) ◽  
pp. 942-973
Author(s):  
Romesh Weeramantry
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Free Trade Agreements ◽  
International Investment ◽  
Court System ◽  
International Investment Law ◽  
Investment Treaty ◽  
Investment Arbitration ◽  
Investment Law ◽  
Investment Agreements

Abstract Cambodia has undertaken several initiatives to attract foreign direct investment (FDI), which has been growing rapidly in recent years, particularly through participating in Association of South East Asian Nations (ASEAN) investment agreements and free trade agreements (FTAs). This article first outlines Cambodia’s arbitration law and practice, its Law on Investment, the court system, problems relating to corruption, and foreign direct investment (FDI) patterns. It then surveys trends in Cambodia’s comparatively belated signing of investment treaties, and their main contents (including recent treaties with India and Hungary, adopting very different models). The article then discusses the only investment arbitration instituted against Cambodia, which was successfully defended, followed by a comment on the future prospects for Cambodia’s investment treaty program.

scholarly journals Missed Opportunities: Optimal Investment Timing When Information is Costly

2007 ◽  
Vol 42 (2) ◽  
pp. 467-488 ◽  
Author(s):  
Graeme Guthrie
Keyword(s):  
Real World ◽  
Real Option ◽  
Optimal Investment ◽  
Investment Opportunity ◽  
Missed Opportunities ◽  
Investment Timing ◽  
Real Option Analysis ◽  
Amount Of Information ◽  
Optimal Delay

AbstractReal option analysis typically assumes that projects are continuously evaluated and launched at precisely the time determined to be optimal, but real world projects cannot be managed in this way because of the costs of formally evaluating an investment opportunity. This paper shows that immediate investment is more attractive if evaluation costs are high or the amount of information to be revealed by an evaluation is large. The optimal delay until a reevaluation is long if evaluation costs are high or the amount of information to be revealed by an evaluation is small. The reduction in the value of project rights is especially severe when the value of the completed project is strongly mean reverting because then precision in investment timing is particularly important.

Where the Shadow Falls: Corruption in International Investment Arbitration

2016 ◽  
pp. 489-501
Author(s):  
Cameron A. Miles
Keyword(s):  
Foreign Direct Investment ◽  
Review Essay ◽  
Direct Investment ◽  
International Investment ◽  
International Community ◽  
Investment Arbitration ◽  
Company Limited

The international community has long been aware of the intersection between domestic corruption and foreign direct investment. As such, corruption is not infrequently (but at the same time, not frequently) a presence in international investment arbitration. Save in rare circumstances (see e.g. World Duty Free Company Limited v Republic of Kenya and Metal-Tech Ltd v Uzbekistan) it is not raised overtly – but instead exercises a tenebrous influence on proceedings that is difficult to quantify precisely. This article is a review essay of the first systematic attempt to chart this influence across every investment arbitration case in which corruption issues have been relevant, Aloysius P. Llamzon’s Corruption in International Investment Arbitration.

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