Foreign Direct Investment Patterns in Transition Economies: An Evolutionary Game - Theoretic Perspective of the 1990s

11 Pages Posted: 9 Sep 2009 Last revised: 12 Mar 2012

Date Written: September 1, 2009

Abstract

The strategic interdependence between market reforms and foreign direct investment (FDI) in transition economies in the 1990s is presented in an evolutionary game-theoretic framework. The static game has two equilibria: in one, FDI contributes to economic restructuring through acquisitions in host countries with rapid market reforms; in the other, slow reform motivates firms to minimize exposure to operational uncertainties through new plant investments. Here FDI plays only a mediating role in economic reform. In a dynamic setting, these equilibria serve to establish conventions about how to invest in countries at different stages of transition. Empirical evidence drawn from U.S. FDI in transition economies further illustrates the model’s equilibria.

Keywords: evolutionary game theory, foreign direct investment, transition economies

Suggested Citation

Wooster, Rossitza B., Foreign Direct Investment Patterns in Transition Economies: An Evolutionary Game - Theoretic Perspective of the 1990s (September 1, 2009). Journal of CENTRUM Cathedra, Vol. 2, Issue 2, pp. 79-89, 2009, Available at SSRN: https://ssrn.com/abstract=1470318

Rossitza B. Wooster (Contact Author)

Portland State University ( email )

Department of Economics
P.O.Box 751
Portland, OR 97207
United States
503.725.3944 (Phone)
503.725.3945 (Fax)

HOME PAGE: http://web.pdx.edu/~wooster/

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
95
Abstract Views
690
Rank
495,746
PlumX Metrics