POLS 1301 Lecture Notes - Lecture 11: Moral Hazard
Document Summary
Investment has increased drastically over the 20th century: high rate of return, access to natural resources or foreign markets, enhanced efficiency, differences in business environment. Fewer rights: different economic trends, higher costs of information and transactions. The advantages seem to outweigh costs increased investment. Types of cross-border investment: portfolio investment, bonds, loans. Race to the bottom companies invest in countries with less regulation: does not explain all investment activity, only some. Distributional conflicts with foreign investments: terms of investments, loans variable rates during boom and recession, obsolescing bargain.