Price or politics? An investigation of the causes of expropriation
AbstractExpropriations of foreign direct investment in developing countries are typically blamed on political and economic crises in those countries. Developing a new database of expropriations in the minerals sectors of developing country exporters, I show that expropriations were correlated with mineral price booms and that democratic governments were more likely to expropriate. No link is found between expropriations and political or economic crises, except at independence. A better explanation of expropriation would be opportunistic behaviour by host governments when profits of investments are high. In two developed countries, Australia and Canada, expropriations are also found to occur during price booms.
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Bibliographic InfoArticle provided by Australian Agricultural and Resource Economics Society in its journal Australian Journal of Agricultural and Resource Economics.
Volume (Year): 50 (2006)
Issue (Month): 1 (March)
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expropriation; foreign direct investment; natural resources; Resource /Energy Economics and Policy;
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