WASHINGTON, D.C., July 22 -- A new study by the International Finance Corporation (IFC) discusses an increasingly important business phenomenon in developing countries: joint ventures between companies in developing and industrialized countries. Even though these joint ventures offer opportunities for each partner to exploit complementary competitive advantages, they have a reputation for performing unsatisfactorily and for being comparatively unstable. IFC's study focuses on the problems that seem to underlie this instability and on ways in which successful joint ventures have overcome them.
The study entitled
International Joint Ventures in Developing Countries: Happy Marriages?
(
Discussion Paper 29
), is based on a research project by IFC's Economics Department. The research involved detailed interviews carried out by IFC economists with about 75 companies in 6 developing countries.
The discussion paper concludes that joint ventures in developing countries are, indeed, fragile affairs, but that many also have been highly successful over a period of several years. Where they have prospered, early negotiations have produced an agreement which attempts to foresee future difficulties and provides a road map for solving such problems. Moreover, for the particular type of joint venture described in the paper, the provision and use of technology is often an important and continuing issue between the partners. For these joint ventures to work well, both companies need to feel over time that the contributions of each partner are still essential to assure the continuing success of the endeavor.
IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
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