International joint ventures are progressively growing more important in LDCs. However, their activvities frequently lead to conflicts between such countries’ overall economic objectives and the aims of business management.

We consider the problem of stabilising the income of a country, henceforth the borrower, which would always prefer a stable income to a random income with the same average, i.e. a country which is risk-averse. This would be appropriate for countries which are heavily reliant upon agricultural...