Contracting for Credibility
in International Telecommunications Investments
141 Uris Hall,
Columbia Business School
12:00 to 2:00PM
investors and governments in developing countries
around' commitment hazards?
literature supports the inverse correlation between credibility and uncertainty,
confirming that the more credible a government and its institutions, the less
investor uncertainty exists. Likewise,
it is conventionally understood that credibility positively affects investment.
Employing empirical evidence from government institutions and investment
contracts in telecommunication sectors, this project analyzes the strategic
dynamics of investment contracting between foreign investors and governments in
developing countries. It argues
that institutional credibility (alongside market opportunity) positively affects
private investment, specifically foreign private investment.
Because each state possesses a certain level of institutional
credibility, investors require a minimum amount to safeguard their investment.
In the absence of minimum credibility, investors and states devise
strategies to overcome credibility gaps either by securing specific policy
changes or, more feasibly, by implementing specific credibility-enhancing
mechanisms within the contracting process.
By examining the comparative utility of different gapfilling mechanisms
and the empirical variation of international telecommunications investments in
176 developing countries between 1984 and 2000, this project explicates how,
when, and to what success investors and states contract for credibility.
Allison Fine (Columbia University and Yale Law School)