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Price or politics? An investigation of the causes of expropriation

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  • Duncan, Roderick

Abstract

Expropriations 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.

Suggested Citation

  • Duncan, Roderick, 2006. "Price or politics? An investigation of the causes of expropriation," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 0(Issue 1), pages 1-17, March.
  • Handle: RePEc:ags:aareaj:116859
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    References listed on IDEAS

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    1. repec:zbw:rwirep:0298 is not listed on IDEAS
    2. Smith, James L., 2013. "Issues in extractive resource taxation: A review of research methods and models," Resources Policy, Elsevier, vol. 38(3), pages 320-331.
    3. Celine De Quatrebarbes & Bertrand Laporte, 2015. "What do we know about the mineral resource rent sharing in Africa?," Working Papers halshs-01146279, HAL.
    4. Di Corato, Luca, 2013. "Profit sharing under the threat of nationalization," Resource and Energy Economics, Elsevier, vol. 35(3), pages 295-315.
    5. Christensen, Jonas Gade, 2011. "Democracy and Expropriations," Working Papers in Economics 06/11, University of Bergen, Department of Economics.
    6. Colen, Liesbeth & Persyn, Damiaan & Guariso, Andrea, 2016. "Bilateral Investment Treaties and FDI: Does the Sector Matter?," World Development, Elsevier, vol. 83(C), pages 193-206.
    7. Konrad, Kai A. & Kovenock, Dan, 2009. "Competition for FDI with vintage investment and agglomeration advantages," Journal of International Economics, Elsevier, vol. 79(2), pages 230-237, November.
    8. Desai, Mihir A. & Fritz Foley, C. & Hines Jr., James R., 2008. "Capital structure with risky foreign investment," Journal of Financial Economics, Elsevier, vol. 88(3), pages 534-553, June.
    9. Benoît, Jean-Pierre & Galbiati, Roberto & Henry, Emeric, 2017. "Investing to cooperate: Theory and experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 144(C), pages 1-17.
    10. Lahimer, Noomen, 2009. "La contribution des investissements directs étrangers à la réduction de la pauvreté en Afrique subsaharienne," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/1167 edited by Goaied, Mohamed & Bienaymé, Alain, July.
    11. Liesbeth Colen & Damiaan Persyn & Andrea Guariso, 2014. "What type of FDI is attracted by bilateral investment treaties?," LICOS Discussion Papers 34614, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    12. Philipp an de Meulen, 2011. "Labor Heterogeneity and the Risk of Expropriation in Less Developed Countries," Ruhr Economic Papers 0298, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    13. an de Meulen, Philipp, 2011. "Labor Heterogeneity and the Risk of Expropriation in Less Developed Countries," Ruhr Economic Papers 298, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    14. Christian Velasquez-Donaldson, 2007. "Analysis of the Hydrocarbon Sector in Bolivia: How are the Gas and Oil Revenues Distributed?," Development Research Working Paper Series 06/2007, Institute for Advanced Development Studies.
    15. Chang, Roberto & Hevia, Constantino & Loayza, Norman, 2018. "Privatization And Nationalization Cycles," Macroeconomic Dynamics, Cambridge University Press, vol. 22(02), pages 331-361, March.
    16. Laporte, Bertrand & de Quatrebarbes, Céline, 2015. "What do we know about the sharing of mineral resource rent in Africa?," Resources Policy, Elsevier, vol. 46(P2), pages 239-249.

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