The paper makes a number of suggestions to address these potential dangers of liberalization. These include measures to encourage the taking of longer-term positions in developing country markets by institutional investors in richer countries, and support for reserve requirements on capital inflows. The paper finally argues that requirements for equal treatment of investors (in WTO negotiations or elsewhere) should be resisted, where this is likely to prevent policymakers taking a selective approach to foreign direct investment.
Patrick Rey
Principal-agent models take outside options, determining participation and incentive constraints, as given.
- 07/24/2024
- Working Paper