Toews, G., "The Geoeconomics of Contract Enforcement"

Title: "The Geoeconomics of Contract Enforcement"

Speaker: Associate Professor Gerhard Toews, New Economic School

Host:  Assistant Professor Efthymios Athanasiou, Department of Economics, Athens University of Economics and Business

Time: 15.30 -17.00

Room:  76, Patission Str., Antoniadou Wing, 3rd floor, Room A36

Abstract: Historically, international contract enforcement relied on military power. In the late 1960s, Western Great Powers—US, UK, France—reduced military interventions, increasing expropriation risk in developing countries. Using microdata from the petroleum industry, we show that this geopolitical shift led to a 2–4-year delay in production (“backloading”) in developing countries by multinationals headquartered in Western Great Powers, matching the extent of backloading exhibited by multinationals headquartered in other advanced economies. Resource-rich developing economies experienced annual revenue  losses of $1 billion per country, offset by higher government rent shares. These patterns are consistent with the emergence of self-enforcing agreements.