Faithin Omaha eBook Collection

Download or read book Credibility of Economic Reform and Foreign Direct Investment in the Former Soviet Union Region written by Yuri Y. Yermakov and published by . This book was released on 1997 with total page 190 pages. Available in PDF, EPUB and Kindle. Book excerpt: For example, we show that if there is no pre-commitment mechanism it is possible that the government could be interested in increasing the level of reform efforts during the initial stages of reform. This can increase the probability of political reversal which is of a great concern of all private investors. We show that a pre-commitment solution is more desirable comparing to the time consistent solution and that a pre-commitment mechanism is required to enhance the credibility of the pre-commitment solution. And we propose such a mechanism that together with other pre-commitment mechanism can be applied in transition economies, especially in the initial stages of the reform.