LDC Governments: Takeovers and Renegotiations of Foreign Investments

by William Stoever



Governments of less developed countries have been initiating takeovers of foreign investments and renegotiations of investment agreements with increasing frequency in the 1970s. They are attempting to increase their share of the control and of the benefits derived from the investments. But their attempts have often been poorly planned and weakly executed. The governments have frequently obtained less control and fewer benefits than might have been expected. A sampling of cases of full and partial takeovers suggests a recurring pattern of errors stemming from poor management. This article identifies some of the errors and proposes steps which governments may take to improve their management of future takeovers. The conclusions of the study are drawn primarily from eight cases of renegotiations and takeovers. The material for the cases was gathered from interviews of participant's, discussions with host country and multinational officials, published and unpublished documents, court records, news accounts and scholarly writings. The cases cover a wide geographic range and a variety of industries in an attempt to find generalizations which are characteristic of governmental processes across many less developed countries.

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