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Democracy and Expropriations

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    Abstract

    In this paper I develop a voting model that shows the different effects of democratic competition and political constraints on the probability of expropriations of foreign investments. I show that these two aspects of liberal democracy might have very different effects on expropriation risks. Particularly interesting is the prediction that for low to intermediate levels of political competition for executive power, increased competition will lead to higher risk of expropriation. Testing this and other predictions on panel data for actual expropriations in 27 developing countries, I find support for the predictions from the model.

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    File URL: http://www.uib.no/filearchive/wp06.11.pdf
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    Bibliographic Info

    Paper provided by University of Bergen, Department of Economics in its series Working Papers in Economics with number 06/11.

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    Length: 96 pages
    Date of creation: 02 Feb 2011
    Date of revision:
    Handle: RePEc:hhs:bergec:2011_006

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    Postal: Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway
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    Web page: http://www.uib.no/econ/en
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    Keywords: Democracy; Expropriations; Foreign investments;

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