Abstract:
Chapter 1. This paper examines host governmentsí motivations for restricting
ownership shares of multinational Örms (MNFs) in foreign direct investment (FDI)
projects. A host country has a proÖtable investment opportunity. The host government wants to capture the projectís rent yet cannot observe the surplus created by
the MNF. In contrast, a joint venture (JV) partner can observe the surplus. The host
government can alleviate its informational constraints by using ownership restrictions
to force a JV. This calls into question the wisdom of calls for ëliberalizingíFDI áows
by the elimination of domestic JV requirements....
