Sunday, 27 December 2009

Incentives matter: motor industry file

From a story in the Wall Street Journal,
Venezuelan President Hugo Chávez, beset by a recession that is hurting his popularity, has turned his sights on international car companies, threatening them with nationalization and pledging to ramp up government intervention in their local businesses.

The populist leader has threatened to expropriate Toyota Motor Corp.'s local assembly plant if the Japanese car maker doesn't produce more vehicles designed for rural areas and transfer new technologies and manufacturing methods to its local unit. He said other car companies were also guilty of not transferring enough technology, mentioning Fiat SpA of Italy, which controls Chrysler Group LLC, and General Motors Co.
What incentives does this give the car companies? Anyone what to take a bet on what will happen to rural Venezuelans’ access to automobiles and other automotive products? Anyone what to take a bet on what will happen to private foreign investment in Venezuela?

(HT: Cafe Hayek)

1 comment:

Crampton said...

Francisco D'Anconia, head of Toyota's Venezuela Division, recently announced they'd been transferred the designs for a revolutionary engine, designed partially by Ed Begley Jr., that runs on the socialist's smug sense of self-satisfaction. Many locals were hired to put the car into production. Of course, Chavez might be disappointed with results when he nationalizes it....