My paper characterizes a dynamic relation between a firm and an impatient government that may expropriate the firm without legal punishment. The only sanction mechanism of the firm results from its productivity advantage in managing its assets. In this environment, I derive dynamics of investment and transfers and characterize the unique stationary allocation. The steady state features non-monotonic comparative statics of the government's payoff with respect to its relative production efficiency. While the reduced incentive problem associated with technological incompetence increases investment efficiency, the lower threat point limits the share of the surplus obtained by the government. Markov-type discount rate shocks of the government generate expropriation on the equilibrium path with low technology-intensive sectors at the top of the pecking order. Firms are able to mitigate the government's incentive to expropriate via non-horizontal integration. The model predictions are consistent with observed contracts between sovereign countries and foreign direct investors.

Данное издание не является оригинальным. Книга печатается по технологии принт-он-деманд после получения заказа.