Autocratic regime survival, regime instability, and foreign asset expropriation

Although autocratic states expropriate foreign assets more often than democracies, some autocracies do not expropriate at all, representing a puzzle in the literature. Building on the autocratic political survival and expropriation literatures, we argue that autocracies under regime instability, as reflected by elite defections and mass anti-government unrest, are likely to expropriate foreign assets to finance patronage networks and weaken ruling coalition rivals, boosting their political survival. We further posit that autocracies expropriate foreign assets to co-opt the mass public who often oppose foreign firm ownership, enhancing the regimes’ legitimacy. Using data on expropriation episodes and autocratic regimes from 1961 to 2010, we find that regime instability, measured by elite and mass unrest, increases expropriation risk, and the results are robust to multiple specifications and different indicators of autocratic regime instability. This paper identifies the mechanisms linking autocracies and asset seizure, helping to solve a puzzle in the expropriation literature.