Template-Type: ReDIF-Paper 1.0
Title: Debt versus Foreign Direct Investment: The Impact of Sovereing Risk on the Structure of Capital Flows to Developing Countries
Author-Name: Monika Schnitzer
Keywords: Foreign Direct Investment, Sovereign Risk, International
Abstract: In this paper we compare the two standard forms of international 
  investments in developing countries, debt and foreign direct investment, form a finance perspective. It
  is shown that the sovereign risks associated with debt finance are generally less severe than the 
  ones which come with FDI. FDI is chosen only if the foreign investor is more
  efficient in running the project, if the project is risky and if the foreign investor has a good 
  outside option which deters creeping expropriation. We show furhtermore that the host
  country and the foreign investor may benefit from forming a joint venture. 
Classification-JEL: 
Series: SFB Discussion Paper
Creation-Date: 1995-05
File-URL: http://www.wiwi.uni-bonn.de/bgsepapers/bonsfa/bonsfa484.ps
File-Format: Application/PostScript
File-Size: 41
Handle: RePEc:bon:bonsfa:484