Democracy, Autocracy, and Expropriation of Foreign Direct Investment

Stylized evidence indicates that democracies and autocracies both expropriate foreign direct investment but that democracies do so less frequently. What explains the similarities and differences in expropriation between regime types? An analysis of actual expropriation acts in 63 developing countrie...

Full description

Saved in:
Bibliographic Details
Published inComparative political studies Vol. 42; no. 8; pp. 1098 - 1127
Main Author Li, Quan
Format Journal Article
LanguageEnglish
Published Los Angeles, CA SAGE Publications 01.08.2009
SAGE PUBLICATIONS, INC
Subjects
Democracy
Developing Countries
Expropriation
Foreign Investment
Incentives
Investment
LDCs
Leadership
Multinational corporations
Political systems
Privatization
Reform
expropriation
regime type
autocracy
event count model
multinational corporations
foreign direct investment
democracy
Online AccessGet full text

Cover

More Information
Summary:Stylized evidence indicates that democracies and autocracies both expropriate foreign direct investment but that democracies do so less frequently. What explains the similarities and differences in expropriation between regime types? An analysis of actual expropriation acts in 63 developing countries from 1960 to 1990 shows that democracies are most likely to expropriate foreign investment when leaders face little political constraint and when they reside in countries with frequent leadership turnover. Autocrats are least likely to expropriate foreign assets when they face high political constraints and have stayed in power for a long time. In essence, the chief executive's political incentive and policy-making capacity determine the host government's expropriation decisions. The findings have important implications for the rule of law, property rights protection, investment behaviors, and the prospect of privatization reforms.
Bibliography:SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 14
ObjectType-Article-1
ObjectType-Feature-2
content type line 23
ISSN:0010-4140
1552-3829
DOI:10.1177/0010414009331723