Opposition to FDI and financial shocks

Joshua Aizenman

Research output: Contribution to journalArticlepeer-review

11 Scopus citations


We identify conditions under which emerging market's capitalists would oppose financial reform in an economy where entrepreneurs can borrow internationally, but foreign agents cannot hold domestic equity. A financial crisis that raises the domestic interest rate may induce the emerging market's capitalists to support opening up the economy to FDI. Even in these circumstances, the emerging market's capitalists would prefer a partial reform to a comprehensive one. If the attitude of capitalists is the obstacle to a comprehensive reform, a side payment from labor to the capitalists may be needed to induce a reform.

Original languageEnglish
Pages (from-to)467-476
Number of pages10
JournalJournal of Development Economics
Issue number2
StatePublished - 1 Aug 2005
Externally publishedYes


  • Capital controls
  • Financial risis
  • Foreign direct investment

ASJC Scopus subject areas

  • Development
  • Economics and Econometrics


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