Issues and risks of nationalization of foreign companies

Enjeux et risques des nationalisations des entreprises étrangères

Hugo Spring-Ragain ()
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Hugo Spring-Ragain: HEIP - Hautes Etudes Internationales et Politiques, Centre d'Etudes Diplomatiques et Stratégique

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Abstract: This article analyses the relationship between the nationalisation of foreign firms, institutional credibility, and the attractiveness of foreign direct investment. Using a formal two-period hold-up model - with a Cobb-Douglas production technology and a logarithmic reputation cost - we establish the existence of a nationalisation threshold K∗ and characterise the resulting equilibrium underinvestment. The model's predictions are confronted with three case studies in the energy sector (Bolivia 2006, Argentina 2012, Russia), illustrating how the institutional parameters φ and δ mediate the economic impact of nationalisations. We find that this impact depends less on nationalisation per se than on the institutional environment in which it occurs.

Date: 2026-07-07
New Economics Papers: this item is included in nep-cis and nep-int
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Published in 2026

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04606020

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