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NAERINGSPH-Nærings-phd

Financial, political and regulatory risk in Norwegian direct foreign investments

Alternative title: Finansiell, politisk og regulatorisk risiko i Norske utenlands investeringer

Awarded: NOK 0.67 mill.

Project Manager:

Project Number:

271330

Project Period:

2017 - 2020

Funding received from:

Subject Fields:

How do firms protect their investments in emerging markets against non-financial risks? The answer to this question is valuable for investors considering investing in multinational enterprises (MNEs) that invest in emerging market countries or managing existing investment abroad. The answer will also be important to analysts who follow firms investing in emerging markets as well as to academics who study the behaviors of MNEs. Governments (including the government of Norway) may also be interested in the answer to this question, considering the governments partly own most MNEs. In this Ph.D. program, we are looking at how companies and investors can guarantee the safety of their investments in the absence of a formal bilateral investment treaty. The project started in August 2017, with a structure o to write three papers. The first paper is looking at ownership levels of multinational firms in Africa. This is being written together with his supervisors, Birgitte Grøgaard and Sverre Thomassen at BI Norwegian Business School. So far, the candidate is taken all the Ph.D. level courses, and have his first paper accepted and presented at the 38th Annual Conference of the Strategic Management Society in Paris 2018. The project is on plan.

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This research shall examine the financial, political and regulatory risk in Norwegian direct foreign investments (FDI). It will do so by studying how Norwegian direct foreign investments in emerging markets are protected against political and regulatory risk; particularly in countries where Norway has no bilateral or multilateral investment treaties (BITs). Historically, when investors from developed countries such as Norway invest in emerging markets, one of the main challenges is how to protect their investments against potential changes in local regulations and politics that might affect the value of their investments. Investors have relied on, inter alia, investment agreements between their home government and the host country for guarantee of enforceable rights in the event of a potential expropriation of their property. This provide some form of insurance for the investments abroad. However, in the case of today?s Multinational enterprises (MNEs), Norway has not signed many BITs or investment agreements with most of these emerging market countries where Norwegian companies invests. To understand what a lack of a guaranteed enforceable rights mean for Norwegian MNEs, this research shall examine variously previously concluded investment agreements by a selection of Norwegian Multinational companies and come up with recommendations on how Norwegian investments abroad can be protected against political and regulatory risk.

Funding scheme:

NAERINGSPH-Nærings-phd